Investors Shrugging Off Virus Concerns
Global equities benchmarks started the week in a positive manner with most indices rallying on Monday. However, gains have proved short lived and sentiment has soured somewhat on Tuesday as emerging risk factors temper bullish momentum. The chief concern among investors currently is that of a potential second wave of the virus. News that 38 states in the US have reported a fresh increase in cases over the last two weeks, with 12 noting fresh highs in the number of new infections, has created uncertainty among investors. With the number of new cases rising, some local leaders have made the decision to reimplement shutdown orders with the hospitality sector seeing closure in 19 California, a move followed by the Miami-Dade County Mayor this week.
In a bid to combat the economic disruption caused by the virus, Trump signed an executive order on Monday providing an extension to the Fed’s main street lending program offering forgivable loans to small businesses. Despite the sell-off so far today, the risk backdrop remains broadly backdrop with many investors seemingly focused on the fact that despite the rise in cases, the death toll from the virus has not increased and is in fact falling in the US, which currently has a mortality rate of only 4%. However, should the death toll start to increase, this would certainly lead to a more developed sell-off and the prospect of further economic shutdowns.
Technical Views
DAX (12379.12)
From a technical viewpoint. The DAX continues to trade higher within the bullish channel and is now sitting back above both the monthly and yearly pivots around (12379.12). However, for now the 12916.11 level remains as resistance. While the pivots hold, however, the near-term bias remains bullish.
S&P500 (Bullish above 3115.75)
From a technical viewpoint. The S&P found support at the rising trend line and has now broken above the 3115.75 level. With VWAP supportive, bulls are looking for a move above the post-lockdown highs and a breakout towards the 3391.75 level.
FTSE (Bullish above 5918.7)
From a technical viewpoint. The FTSE is trading above the monthly pivot at 6217 and remain supported by the bullish channel, keeping the near-term bias bullish here. However, a break below the channel will put attention on the monthly S1 at 5918.7 where VWAP is sitting also creating a strong technical level to watch.
NIKKEI (Bullish above 22232.9)
From a technical viewpoint. The NIKKEI continues to hold above the yearly pivot at 22232.9 and while above here, the near-term outlook remains bullish with the 23273.6 highs the next upside level to note. However, a break below the pivot will bring deeper support at the 20500 level into view.
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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!