Markets Quiet Ahead of US Data
It’s been a broadly quiet start to the week for benchmark global equities indices. The resurgence in the US Dollar has had a dampening impact on the recent upside momentum we’ve seen. While most indices tracked here are holding near recent highs, upside interest has certainly been diluted on the back of last week’s US inflation readings. Headline and core CPI for October were both seen well above forecast, refocusing the market on Fed tightening expectations and the chances that the central bank is forced to move on rates ahead of schedule.
Looking ahead this week, the key focus will be on US retail sales due later today. A strong reading will further ignite demand for USD, weighing on equities prices more. However, any disappointment today should dilute the current upside in USD which would be favourable for equities traders.
Away from the USD, the broader risk backdrop remains mostly favourable though there are budding concerns around the path of the pandemic in the west as we head into the winter months (fears of a fifth wave underway in Europe) as well as the tensions around the Ukraine/Belarus border stand-off which is a situation which needs to be monitored. Additionally, the Biden-Xi virtual meeting got underway last night with plenty of focus on Taiwan as both leaders warned each other over the issue.
Technical Views
DAX
The market continues to grind higher within the bullish channel which has framed the move off Q4 lows. Price recently broke above the 16015.97 level and while above there, the focus is on continued upside, in line with bullish RSI and MACD readings.
S&P 500
The S&P has been held up at the 4692.75 level again this week. While price remains within the recent bull channel for now, bearish divergence in momentum studies raises the risks of a reversal lower in the near term. The key support level to watch is the 4545.25 level, where we also have the bull channel low.
FTSE
The FTSE continues to grind higher following the breakout above the 7241 level. Price is now holding around the 7362.6 mark with momentum studies flagging bearish divergence. While the market holds above 7241, however, the focus is on further upside in the near term.
NIKKEI
The rally in the Nikkei has seen the market breaking back above the 29464.9 level though price is currently capped at a test of the recent highs. While above the level, the focus is on a continuation higher towards the 30502.8 level next. To the downside, however, 28356.6 will be the next level to watch.
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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.