Equities Rebound Amidst USD Dip
Global equities markets are seeing better demand today with the found indices tracked here each in the green across the European open on Tuesday. The main driver behind the current action is the pull-back in the US Dollar. Following a further breakout at the start of the week, the Dollar has since softened marginally. The move likely reflects the shift in focus elsewhere this week as markets look to the three central bank meetings (RBA, BOC, ECB) which got underway with a .5% RBA hike overnight.
In the UK, the confirmation of Liz Truss as new UK PM has been met with a relief rally in UK asset prices for now. Truss’ focus on spending and tax cuts is viewed as growth-positive near-term, though there are longer-run fears of the potential impact on inflation.
In Europe, traders are bracing for the ECB this week. On the back of record eurozone inflation last month, traders are looking for a larger .75% hike along with a more hawkish outlook on rates, reflecting the elevated inflation environment. Traders will also be keen to hear how the Eurozone judges the risks to the economy from the energy-crisis, particularly in the wake of Nordstream gas supplies being suspended.
Technical Views
DAX
The failure at the latest test of the bearish trend line from YTD highs has seen the market reversing lower, breaking through key support at the 13067.45 level. With both MACD and RSI both bearish, the outlook remains skewed towards further losses while price holds below this level, putting 12462.59 on watch as the next key support.
S&P 500
The S&P has moved sharply lower following the test of the bear channel top. The reversal has seen price moving back inside the initial, corrective bull channel which formed during the initial recovery off YTD lows. Price is now testing the bull channel low and 3910 support area. This is a key support area and a break below here would be firmly bearish.
UK100GBP
The FTSE is continuing its shallow correction from the latest test of the bear channel top and 7558.7 level. Following heavy losses last week, price is currently bounding off support at the 7213.9. MACD and RSI are still bearish for now, suggesting that while price holds below the 7362.6 level, further downside is likely.
NIKKEI
The breakout above the falling wedge pattern has stalled for now with price running into selling interest ahead of 29464.9 and reversing back under the 28356.6 level. Price is currently testing the 27422.9 level next and with both MACD and RSI bearish, there are risks of further losses down towards a retest of the broken pattern top and 26246 support.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.