Risk Sentiment Rallies On Fresh Vaccine Optimism

Global equities benchmarks continue to trade to the upside this week as the latest COVID-19 reports continue to migrate away from second wave risks and more towards hopes of a potential vaccine. Following the recent announcement from Pfizer and BioNTech confirming FDA fast track status for two of their candidate vaccines, equities traders have been further encouraged by the latest headlines this week citing further success in the vaccine development space. The University of Oxford announced that its candidate vaccine has proven effective in trials involving more than 1000 patients. The vaccine in question was said to create an immune response leading to the development of antibodies and t-cells which help fight the infection. The UK government has confirmed an order of 100 million doses of the vaccine. While Oxford has said that further work is needed, the results so far are extremely promising.

Markets have weathered the rise in second wave fears rather well, no doubt as a result of the huge amounts of central bank easing underway and the expectations that more will be coming if necessary. RBA governor Lowe this week said that rates in Australia could be reduced further to record lows of 0.10%, echoing the reassurances offered from other central bankers. With monetary policy around the globe likely to remain in accommodative territory for some time and with the post-lockdown recovery continuing, equities look poised for further upside, albeit at a reduced pace from the rally seen in recent months.

Technical Views

DAX (Bullish above 12916.11)

From a technical viewpoint. The DAX has seen a fresh upside break this week with price moving well above the 12916.11 level which capped the initial post-lockdown recovery rally. While above here, the bias remains firmly bullish with the 13744.70 level the next objective for bulls.

The IndeX Files 21-07-2020

S&P500 (Bullish above 3226.50)

From a technical viewpoint. The S&P has regained upside momentum this week price breaking out above the 3226.50 level. While above here, the bias remains firmly bullish with the 3391.75 level the next upside target for bulls.

The IndeX Files 21-07-2020

FTSE (Bullish above 5922.4)

From a technical viewpoint. The FTSE continues to trade within the lower portion of the rising channel and for now, remains stalled at short term resistance which has formed at the 6335.8 level. While holding above the 50dma the near-term bias remains bullish, with bulls looking for. Breakout towards the 6543.4 level next.

The IndeX Files 21-07-2020

NIKKEI (Bullish above 21758.9)

From a technical viewpoint. The NIKKEI continues to hug the lower trend line of the rising channel as the recovery off 21578.9 support continues. While price holds above the 50dma, the near-term bias remains bullish with bulls looking for a break above the 23273.6 level, targeting 24069.4 next.

The IndeX Files 21-07-2020

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