Equities Rally Following NFP Miss
Global equities benchmarks have had a mainly positive start to the week as markets remains supported in the wake of last week’s US August jobs report. There had ben some trepidation ahead of the release that a strong number might once again re-ignite Fed tapering expectations, fuelling a spate of USD buying, which would ultimately weigh on asset markets. However, with the headline NFP number falling well below estimates at 230k vs 750k expected, the US Dollar has remained fairly subdued following a Friday sell-off.
For now, the near-term outlook for asset markets remains supportive as rising delta concerns keep the focus on continued central bank easing.
This week, traders will look to the ECB for its latest monetary policy update. While there is some speculation that the ECB might announce a reduction in its monthly asset purchases, there are downside risks, highlighted by recent data weakness. In any case, it would likely take a firm, hawkish surprise from the ECB to unsettle European investor sin the near term with the greater likelihood being that the bank once again sticks to a message of caution, highlighting the remaining uncertainty in the outlook.
Technical Views
DAX
The DAX continues to stagnate within the 15743.01 – 16015.97 range which has framed price action over the last month. On a broader scale, the last few months’ ascent can be seen as a rising wedge pattern, highlighting risks of a downside reversal in the near term. On any break below the bottom of the range (and the rising trend line support) the next level to watch will be 15486.96.
S&P500
For now, the S&P continues to grind higher within the bullish channel which has framed price action this year. With indicators still bullish, the focus is on continues upside for now. To the downside, any correction lower will see support firstly at 4475.25 followed by the channel low and 4383.50 below.
FTSE
The recent channel retest saw the FTSE once again finding a bid with the index now trading back above the 7137 level. While above here, the focus is on a continued push higher, supported by bullish indicators, with the 7241 highs the next upside marker to note.
NIKKEI
The bear-channel break has seen an explosive move higher in the NIKKEI over the last week. Price has cleared several key technical levels and with indicators turned firmly bullish, while the 29464.9 level holds as support, the focus remains on further upside in the near term with the 30502.8 level the next target for bulls.
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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.