US Equities Remain in The Lead

Global equities markets have started the week much in the same tone as we have seen over recent weeks with US asset markets leading the pack and Asian equities falling behind. The heavy sell off in the US Dollar over recent weeks has created a sustained upward drive in the headline US indices with the S&P500 hitting new record highs on Monday. The dialling back of Fed tightening expectations has alleviated the sense of any near-term downside in US equities meaning that, despite better US data, equities investors look poised for further gains the near term.

In the UK and Europe, equities markets ran into selling pressure on Tuesday, despite a positive start to the week. The fears of vaccination issues within both economies and the risks of a third wave have caused some hesitation among investors. This week, the main focus will be on the ECB meeting due on Thursday. While no change in policy is expected, traders are braced for a fairly dovish message from the bank given the ongoing fears over a third wave of the virus.

In Japan, meanwhile, the Nikkei has come under fresh pressure this week following news of a fresh outbreak of infections which has resulted in the Japanese government announcing new measures. JPY has been attracting steady safe haven inflows as a result of the latest developments, leaning on Japanese equities markets.

Technical Views


The DAX continues to move above the recent bull channel for now. The break above the 15311.01 level ran into selling pressure, however, though price remains above the level for now. While the level holds as support, the focus is on a further push higher. Below there, the next level to watch is the 14783.12 level.


The rally in the S&P this week has seen price testing the top of the rising wedge formation which has framed the rally since Q4 2020. For now, price has stalled at current highs around 4180.50 with the next key support zone down at the 2964.25 providing the first downside marker to note.


The rally in the FTSE this week has seen price trading up above the former 2021 highs to test the 7025.8 level which, for now, is holding as resistance. However, while price holds above the 6803.1 level


For now, the NIKKEI remains within the contracting triangle pattern which has formed over the recent consolidation within the longer-term bullish channel. While price holds above the triangle low and the 29005.6 level, the view is still in favour of a break higher. However, should price slip below the 29005.6 level there is room for a run down towards the bull channel low.

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