Markets Higher on Better US Data
It’s been a mostly positive start to the week for global equities benchmarks as better momentum returns on the back of recent US data surprises. Last week, the March Non-Farm Payrolls number came in well above expectations at 916k versus 652k expected. The strength in labour market conditions helped drive risk assets higher into the end of the week, offering further encouragement that the US economic recovery is gathering pace.
While the headline NFPs were seen coming in above expectations, however, the wage growth figure was seen shrinking over the month at -0.1%. With the Fed having recently cited the importance of wage growth in driving a rerun to target inflation, the weakness there has pulled the near-term USD prospects lower, giving a green light to equities investors.
This week, traders will be focusing on the FOMC meeting minutes looking for further detail on the Fed’s outlook and assessment. Traders will also receive the latest round of PMI readings for the UK and Europe which should help drive equities higher still if the readings are in line with consensus forecasts.
The rally in the DAX has seen price breaking out above the 14783.12 level and above the local bull channel top. While price holds above this area, the focus is on a further push higher. To the downside, any correction below that area should find support into the 14411.90 level next.
The S&P rally continues with price breaking out above the recent 3964.25 level highs which had acted as a cap on the market over recent months. While above here, the outlook is firmly bullish. Any correction below that level should find support into the 3786.25 level next.
The FTSE is once again attempting to break out above the 6803.1 level following the rebound off the 6640.6 level support. With bearish divergence growing, however, there is a risk that a further failure here could spark a bigger sell off in the index.
The Nikkei continues to consolidate within the 28372.5 – 30752.5 range which has framed price action over recent months. For now, while price holds within the bull channel, the focus is on an eventual continuation higher above the 30752.5 level.
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