Equities Markets Weaker Ahead of FOMC Minutes Tomorrow
Global equities benchmarks have seen a timid start to the week with the four indices tracked here under pressure across early European trading on Tuesday. Yesterday saw quiet flows and limited action with US markets off line for President’s day and traders across the pond looking to tread carefully ahead of the FOMC minutes on Wednesday. The US Dollar looks to be finding its feet again today after suffering a weaker start yesterday, which is also having a limiting effect on equities prices.
The release of January PMI’s today in the Eurozone, US and UK will be the main focus for markets. Should US data surprise to the upside once again (strong recent trend of data beats), hawkish expectations are likely to build further ahead of the March FOMC, which will be bad news for equities near-term. In the UK and Eurozone, however, asset prices are likely to be a little more buoyant if today’s data confirms better business activity in January, diluting recession fears further.
The main event for the week, however, will be tomorrow’s FOMC minutes for January. Given the recent strong of data beats and hawkish Fed commentary we’ve seen, the minutes might have lost a little relevance. However, USD bulls will be clinging onto any hawkish details they can find meaning that risks are skewed to the downside for equities prices this week with USD vulnerable to a fresh move higher.
Technical Views
DAX
For now, the DAX continues to hold within the top of the rising wedge formation, held up by support at the 15163.41 level and capped by resistance at 15642.76. With momentum studies having weakened recently, there are growing risks of a reversal lower with 14703.98 the next support to watch if current lows are broken.
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S&P 500
The failure at the 4153.50 level has seen the market turning sharply lower, in line with falling momentum studies. Price is now fast approaching a test of the bull channel lows which, if broken, open the way for a test of 3910.00 next. Bulls will need to defend this level to prevent a fuller reversal lower.
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FTSE
After breaking out to record highs last week, the FTSE is now softening a little from those highs. However, while within the bull channel and while 7904.7 holds as support, the outlook remains bullish. Should that level give, there is a bigger support level at 7678.8 which will be the key test of the market.
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NIKKEI
The market continues to stall around the 27422.9 level. Price has been caught up here over much of this year and, now just below the level, with momentum studies weakening the index looks vulnerable to a dip lower with 26407 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.