Optimistic Tone To Asset Markets
Global equities benchmarks have started the week in a positive manner with asset prices improving across the board. Following a retracement lower last week across key indices, we are now seeing a continuation of the initial recovery which started in the final week of March.
The lock-downs in place around the world look to be having a positive impact on the spread of COVID-19 with countries such as Spain and the UK noting a drop in the pace of new infections. However, with the global death toll still increasing each day there is no expectation for these lock-downs to be ended in the near term.
In the US, the New York governor has extended the lock-down there until the end of April, as with Spain. It is likely that such an extension will be announced in the UK where the PM, Boris Johnson, has been admitted to intensive care due to his persistent coronavirus symptoms.
However, despite the death toll still increasing and despite the latest from the New York governor, President Trump, speaking yesterday, said that the US will reopen “sooner than people think”. Trump has come under criticism for such comments from health chiefs who warn that the situation is still very much an active threat and must continue to be handled with care.
With central banks around the world engaged in fresh easing, including the Fed’s move into non-quota QE, asset markets have been stabilising and recovering. The extent of the recovery we are seeing will likely depend on how much longer the lock-downs continue for and how bad the data slump becomes.
DAX (Bullish above 10186.43)
From a technical viewpoint. The DAX has now broken back above the monthly pivot and recent structural highs at 10186.43. While price holds above here, a continued recovery is likely with the yearly S1 at 11256.27 the next key objective for bulls.
S&P500 (Bullish above 2696.00)
From a technical viewpoint. The rally in the S&P is gathering pace now. Price has broken back above the recent highs and monthly pivot at 2621.75, confirming a higher low, and is now breaking above the yearly S1 at 2696.00.
FTSE (Bullish above 5800.0)
From a technical viewpoint. The recovery in the FTSE is now at a crucial point. With price testing the monthly pivot 5741.1 and recent structural highs, bulls will need to see a firm break higher above 5800 to keep the recovery on course. However, with VWAP still negative, we could see further consolidation around the 5456.5 support.
NIKKEI (Bullish above 19076.1)
From a technical viewpoint. The retracement lower in the Nikkei, from last week’s highs saw price falling back below the monthly pivot (18759.3) and the 19076.1 level. However, price has now recovered back above this area. If price can break above the recent 19930.2 highs the main objective will be overcoming the yearly S1 at 20365.9.
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