Risk Apetite Remains Positive
Global equities benchmarks continue to show demand this week. As with recent weeks, momentum has notably contracted as we head into the typically quieter summer months. However, equities markets have retained a bid tone with the S&P continuing to push higher and other markets, such as those in the UK and Asia, beginning to find their feet again following some recent selling. With little of note on the data front, the optimism is being attributed to the positive US payrolls report at the end of last week and a broadly positive US earnings season which saw the majority of companies reporting beating estimates. These earnings reports have helped encourage the view that the downturn suffered as a result of COVID-19 has not been as bad as initially thought, a perspective shared by many G10 central banks over recent weeks. The strength in equities markets comes despite a tentative pickup in the US Dollar and has no doubt been helped by the pull back in gold which has been retreating from recent highs this week. In terms of the outlook going forward, equities markets look likely to retain a positive tone, which remains the core view, unless the Dollar rally begins to pick up steam. With this in mind it is worth noting some steepening of the Dollar curve here which could help spur further buying in the greenback.
Technical Views
DAX ( Bullish above 11861.50)
From a technical perspective. The DAX is now once again attempting to reclaim the 12916.11 handle which, if breached, will then bring a retest of the broken bullish channel into view. Failure here could see price rotating lower to retest the 11861.50 support.
S&P500 (Bullish above 3226.50)
From a technical perspective. The S&P continues to push higher here with price now just shy of testing the 3391.75 2020 highs. Supported by the 50dma and the rising trend line from 2020 lows, the outlook remains firmly bullish here with bearish divergence on momentum studies the only risk factor to highlight.
FTSE 100 (Bullish above 5922.4)
From a technical perspective. After breaking down below the bull channel which has framed the recovery, the FTSE is now correcting lower within a tight bearish channel which can be viewed as a bull flag. While price holds above the 5922.4 level, the outlook remains bullish with the 6543.4 level the next upside objective for bulls.
NIKKEI (Bullish above 21758.9)
From a technical perspective. After breaking down below the bull channel, the Nikkei found support at a retest of the 21758.9 level. With price now back above the 50dma, the near-term outlook remains bullish with bulls looking for a break above the 2373.6 level to target 24069.4 next.
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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.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% 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.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!