Federal Reserve Takes Historic Action

Global equities benchmarks continue to plum fresh lows this week as the steady stream of selling which has characterised recent trading develops further. Indices around the world have traded lower this week despite escalating responses from central banks desperate to stop the selling in markets. The Nikkei has bucked the trend this week, however, as hopes for BOJ & pension fund purchases have helped fuel a rally.

The Federal Reserve has been stealing headlines this week as it announced its latest operation aimed at buffering the economy. Following on from the $750 billion in QE announced earlier in the month, the Fed has now said that it will run QE as necessary rather than as per the limits of a predefined amount. This is the first time that the Federal Reserve has operated what has been referred to as unlimited QE.

Last week, the BOE, the RBA and the BOJ each announced additions to their own stimulus programs. However, despite the co-ordinated efforts of central bankers, the market has yet to mark any meaningful correction higher and the atmosphere among investors is still very much one of concern and uncertainty.

With both the number of new infections and the number of deaths still rising rapidly around the world, the global economy is in serious peril and without an equally co-ordinated action among global governments offering fiscal relief, it is not clear if central banks alone will be able to stop the stock markets collapsing further.

Technical Views

DAX (Bearish below 10268.13)

From a technical viewpoint. The DAX has seen a pop higher over night. After finding support at the 9227.94 level, price has since traded bac up to challenge the 9281 level. While sentiment remains bearish, a further recovery here will put the 10268.13 level back into view which could serve as the platform a higher push.

The IndeX Files 24-03-2020

S&P 500 (Bearish below 2452.75)

From a technical viewpoint. The S&P has now broken down through the long-term bullish trend line and is currently testing the late-2016 highs at 2318.25. Sentiment remains very bearish here and, with VWAP negative, a continuation lower looks likely unless price can quickly recover above the 2452.75 level.

The IndeX Files 24-03-2020

FTSE ( Bearish below 5456.5)

From a technical viewpoint. The FTSE is still languishing just above the recent 4724.8 level support. Though this level is holding for now, the market is still vulnerable to a further break lower unless we see a quick move back above the 5456.5

The IndeX Files 24-03-2020

Nikkei ( Bullish above 19078.6)

From a technical viewpoint. The Nikkei has recovered strongly off the 16170 lows and has now traded back above the 19078.6 level. While above here, a retest of the broken yearly S1 at 20440.8 is the next objective. Keep an eye on the weekly candle close this week as we are currently seeing a strong bullish reversal signal.

The IndeX Files 24-03-2020

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