Attention Turning Back Towards US-Sino Trade Deal

Global benchmark equities indices have seen a pause in their recent upward trajectory though are consolidating near highs, suggesting a continuation higher is coming. The most notable themes for asset markets currently are those of reduced geopolitical risks linked to US-Iran tensions as well as the favourable backdrop of ongoing US-Sino trade relations.

Following a muted US response to an Iranian missile attack on US army sites in Iraq last week, expectations of further aggression between the US and Iran has visibly declined. In an address to the nation, Trump downplayed the significance of the attacks and assured citizens that, according to US intelligence, Iran was stepping down. Since there have been no further moves, from either side, for now, investors are happy to let the situation slide out of focus.

On the US-Sino trade front, investors have been encouraged by news that the US and China will finally put pen to paper on the phase one trade deal on Thursday this week. Once the deal is signed, the market will then be waiting on the schedule for the next round of talks which will be focused on agreeing a phase two deal. Reports that the US and China will now also be holding semi-annual economic talks (separately to the trade negotiations) has also helped assuage investor uncertainty in the near term.

DAX (Bullish above 13186.22)

From a technical viewpoint. DAX is currently testing the monthly R1 at 13500 following a fresh break above the monthly pivot at 13186.22. Momentum divergence poses downside risks though, for now, bias remains bullish.

The IndeX Files 14-01-2020

S&P500 (Bullish above 3190 )

From a technical viewpoint. Price is stalling around the cluster of resistance at the weekly and monthly R1. With momentum divergence in play there is risk of a correction lower, targeting the rising channel low first, ahead of the monthly pivot at 3190. With longer term VWAP still positive, this level could find demand on a wider scale. See chart of the day 

The IndeX Files 14-01-2020


FTSE (Bullish above 7455.4)

From a technical viewpoint. Price is still above the 7455.4 monthly pivot keeping the near term bias bullish, in line with bullish VWAP. However, If we move lower from here, the monthly pivot, in line with recent broken highs should offer first support ahead of the yearly pivot at 7295.3

The IndeX Files 14-01-2020

Nikkei (Bullish above 23498.4)

The IndeX Files 14-01-2020

From a technical viewpoint. Price is trading back above the monthly pivot at 23498.4 as the consolidation continues. With longer-term VWAP still positive, bias remains bullish. Any pullback should find support into the yearly pivot at 22261.2

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