US/China Trade Talks Boost Risk Appetite
The IndeX Files 25-08-2020 – Global equities benchmarks have seen a renewed bout of upside momentum this week with indices around the globe finding firm demand once again. The moves have come in response to confirmation between the US and China that the phase one trade deal agreed earlier this year remains intact and negotiations will continue. There had been concerns following Trump’s recent cancelation of trade talks which had been due to take place last week. However, despite that setback, phone meetings have since taken place between high level US and Chinese officials with both sides re-affirming their commitment to the trade talks.
Markets have also been boosted this week by expectations ahead of Fed chairman Jerome Powell’s speech at the Jackson Hole symposium. The Fed chair is expected to outline the Fed’s new strategy for targeting a return to 2% inflation. Given the highly subdued inflationary environment currently, the market is eagerly awaiting the details of the Fed’s strategy.
On the data front, it is a quiet schedule this week though US durable goods preliminary GDP and PCE data will be the main releasees to pay attention to away from Powell’s comments. US data has been improving recently as the tentative economic recovery continues. However, there are concerns that momentum is slowing down and data weakness this week will likely see a pause in the equities rally.
DAX (Bullish above 12916.11)
From a technical viewpoint. The DAX is trading higher this week with price having broken back above the 12916.11 level. While still capped by recent highs for now, the near-term outlook remains bullish here with the 13744.70 level the next upside region on watch.
S&P500 (Bullish above 3391.75)
From a technical viewpoint. The S&P has broken out to fresh all-time highs this week with price eclipsing the former higher at the 3391.75 level. While above here, the near-term bias remains bullish. Any break back below the level will turn attention to the 3226.50 level support next.
FTSE (Bullish above 5922.4)
From a technical viewpoint. The FTSE is pushing higher this week also though remains within the corrective bearish channel for now. While price holds above the 5922.4 level, the near-term bias remains bullish with the 6543.4 level the next key resistance to watch.
NIKKEI (Bullish above 23273.6)
From a technical viewpoint. The NIKKEI is climbing again this week with price currently breaking back above the 23273.6 level resistance. While price holds above here, the near-term outlook remains bullish. The next hurdles will be the 24069.4 level with the broken bullish channel coming in just above.
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