Equities Fighting To Recover Losses
It’s been a mixed start to the week for global equities indices as most of the benchmarks tracked here continue to fight to reclaim the recent losses seen. Uncertainty over the potential for war between Russia and Ukraine, as well as concerns over the hawkish shift seen across G10 central banks, is weighing on sentiment currently.
Last week we see hawkish updates from both the ECB and the BOE with the latter lifting rates and the former no longer ruling out a rate hike in 2022. With most g10 central banks now embarking on or close to embarking on a tightening path, the near-term outlook for equities looks fraught with downside risks. Friday’s US jobs report saw a much stronger than expected headline NFP result and, with the market gearing up for a hike from the Fed next month, the S&P is struggling to find upside impetus.
Looking ahead this week, the focus will be on US CPI data due on Thursday. Should we see another strong reading, this is likely to further drive market expectations ahead of March, weighing on equities. However, any disappointment in the reading should create room for a near term rebound in US asset markets at least. Aside from USD flows, it is also important to monitor updates from the Russia/Ukraine situation. Any sign of tensions escalating will likely be accompanied by heavy risk off flows in the near term, weighing on equities prices.
Technical Views
DAX
For now, the DAX is holding above the 15078.83 level, following a subsequent test of the support zone. Both MACD and RSI are negative here, suggesting the risk of a deeper push lower unless price can get back above the broken bull trend line. To the downside, 14791.27 is the next support level to note.
S&P500
The rebound off the 4295.75 level has seen the S&P trading back above the 4475.25 level, where it is holding for now. With MACD having turned positive, while price can hold above this level, the focus is on a push higher with the 4744 level and broken bull channel the next upside area to watch
FTSE
The rally off the 7241 level continues in good health today with price breaking back above the bull channel top. With both MACD and RSI bullish here, the focus is on a test of the 7691.6 level next with 7792.1 the next level to note above. To the downside, any correction should find support into the 7362.6 level initially.
NIKKEI
The Nikkei continues to hold just beneath the 27422.9 level and broken contracting triangle pattern. Both MACD and RSI have turned positive here, suggesting room for an upside break. If we do break higher here, 28356.6 is the next level to watch. To the downside, 26242 is the next support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.