Better Start For Equities

It’s been a mostly better start for global equities benchmarks this week as the pullback in the US Dollar allows asset markets to recover. The broader themes of higher energy prices and commodities prices are feeding near term upside here, a theme which looks likely to continue in the near term at least. The Dollar has last ground in recent weeks over speculation that other G10 central banks will begin tightening at a faster pace than the Fed. While the market is broadly expecting the Fed to begin tapering in November, recent data has failed to deliver the sort of conviction bulls are looking for and with rising cost pressures elsewhere, banks such as the BOE and the BOC are starting to take on more investor focus. We recently heard from the BOE chief who warned that the bank might need to raise rates before the end of the year in a bid to counter spiralling costs. However, the Fed is not expected to begin raising rates until late next year.

Looking ahead this week the focus will be on UK and Canadian CPI as well as slew of PMI data sets for the UK, EU, and US later in the week. Manufacturing readings will be in particular focus given the current energy and supply chain issues with traders keen to see how this has impacted the factory sector.

Technical Views

DAX

The breakout above the corrective bear channel has seen price trading back above the 15486.96 level. Though price has softened a little here, with both MACD and RSI still bullish, the focus is on further upside with the 15743.01 level the next upside marker to note.

S&P500

The S&P is moving higher again here with price breaking out above the corrective bear channel and now testing the 4475.25 level. With both MACD and RSI in the green, the focus is on further upside here and fresh test of the 4545.25 highs in the coming sessions.

FTSE

The recent rally in the FTSE has seen price trading back up to test the 7241 level highs. While the region is holding as resistance for now, with both MACD and RSI bullish here, the focus is on a breakout and test of the 7362.6 level next. To the downside, 7137 is the key support to note.

NIKKEI

Following the reversal off the 26932.1 lows, the Nikkei has now trading back above the broken bear channel and holding just below the 29464.9 level. With both indicators bullish again, the near term focus is on a break above the level, targeting 30502.8 next.