Vaccine Hopes Boosting Risk Sentiment

Global equities benchmarks are trading with renewed upside momentum this week amidst a broad improvement in risk sentiment. Investor appetite is returning as the global COVID-19 deaths continue to decline, suggesting that hopefully the worst of the virus is now passing. Sentiment has been further boosted this week by news that US firm Novavax, which is a late-state biotechnology company, has begun clinical human testing this week. In the first phase of the tests, Novavax is administering its candidate vaccine to 131 test-patients across different cities in Australia. With the company aiming to have the first test results back by July, the market is growing increasingly hopeful that a vaccine will soon be found.

Lockdown measures continue to ease globally with Japan exiting its state of emergency now in line with the global trend of lifting restrictions. Recent data sets from the US, UK and Europe have shown a marked improvement ion last month investors are now fully focused on the recovery effort. With the UK lockdown due to be eased further this week as deaths there fall to their lowest since lockdown began, there is a general backdrop of optimism supporting equities this week. Central banks across the G10 have reaffirmed their commitment to easing further if necessary, helping to further encourage risk sentiment as the recovery effort gets underway. The BOE recently confirmed that for the first time in the bank’s 324-year history, it is now considering negative rates.

Technical Views

DAX (Bullish above 1128.5)

From a technical viewpoint. The recovery in the DAX has now passed a crucial point with price breaking above an area of strong, confluent resistance at 1128.5 (current recovery highs, yearly S1, VWAP 11289.5). if price can sustain above here the top of the channel and structural highs at 11861.85 will be the next objective or bulls.

S&P500 (Bullish above 2884.50)

From a technical viewpoint. The S&P continues to push above the yearly pivot at 2968.50. With VWAP positive now,  while it holds above 2884.50, price is on course to retest the underside of the broken bullish channel next, with the monthly R1 in sight also at 3098.50.

FTSE (Bullish above the 5793.2)

From a technical viewpoint. The FTSE continues to hold within the middle of the bullish channel, stalled at the recovery highs around 6178.1 , just ahead of VWAP and the channel top. While price remains supported by the monthly pivot at 5793.2, near term bias remains bullish though bulls will need to see price quickly above the 6246.7 monthly R1 to regain momentum.

NIKKEI (Bullish above 20432.1)

From a technical viewpoint. The NIKKEI has now broken above the top of the rising edge formation and the monthly R1 at 21092.6. With VWAP positive, price is pushing higher and while price holds above the 20432.1, bulls target a test of the yearly pivot next at 22281.6.

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