Risk Sentiment Holds Firm

Global equities benchmarks have started the week broadly in the green with most indices trading at or near recent highs. The COVID vaccine backdrop continues to offer support for risk sentiment as traders seek to end the year on an optimistic tone given the hopes for a return to normal over next year. With several companies having now submitted their vaccines for regulatory approval in the UK, the US and the EU, markets are hopeful that the situation will quickly improve over the early part of next year as more countries carry out mass vaccination. There are still some risks, however, given the uncertainty around public demand and take-up for the drugs. However, it seems for now that traders are happy to continue buying risk assets here.

Weakness in the US Dollar has also helped keep equities prices well supported this week as the focus on the switch to the incoming Joe Biden administration has raised expectations of further US fiscal easing with hopes that democrats will be able to push through a bigger stimulus package than the amount being proposed by republicans.

Technical Views

DAX

The DAX continues to hover around the 13322.69 level resistance for now. The level has acted as a cap following the breakout above the recent bearish channel. However, while price remains above the channel and above the support at 12916.11, the outlook remains tilted towards further upside.

S&P500

The S&P continues to drift higher above the 3586 level. While above here the focus remains on continued upside in the near term. However, the bearish divergence in momentum studies is worth keeping an eye on. Should price slip back below the 3586 level, the next support to watch is down at the 3391.75 level where we also have the rising trend line from year to date lows.

FTSE

Price continues to hold above the 5618.2 level following the breakout above the bearish trend line in November. While price holds above the level, risks are skewed towards further upside in the near term.

NIKKEI

The Nikkei rally has paused over the last week with price holding in a tight range between the 26213.4 level support and resistance at 26949.5. The market remains well supported, however, and while above the 26213.4 level, the near-term outlook remains bullish.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.