Risk Sentiment Supported Amidst Vaccine Hopes

Global equities benchmarks are in the green across the board today as the week continues in a positive tone for investors. News of a potential COVID-19 vaccine has taken centre stage this week following the announcement by US Biotech firm Moderna which said that one of its candidate vaccines is trialling well. Moderna said that the drug in question has shown positive immune responses in all eight patients included in the trial and will now move ahead with broader trialling plans. As the world begins to move into the post lock-down phase of fighting the virus, a vaccine could help greatly expedite the global recovery.

The news has helped to take the emphasis off the continued deterioration in US/China relations which has exerted downside pressure on risk assets over the last week. In the latest instalment in what has become an ongoing saga, there has been a further clash over the $2bln Chin has pledged to the global effort to fight COVID-19. President Xi announced the donation via video link at World Health Assembly, the annual WHO decision-making meeting. However, Trump quickly shot down the pledge as nothing more than a distraction against the growing calls for scrutiny over China’s role in the outbreak of the virus. This comes after Trump has recently threatened to apply massive financial penalties against China and even cancel the trade negotiations still underway.

Technical Views

DAX (Bullish above 11265.15)

From a technical viewpoint. The DAX is continuing to push higher within the local bullish channel and is now challenging the current recovery highs with further resistance above at the yearly S1 11265.15 where VWAP sits also. If price can sustain above this level, bullish conviction will be strengthened.

The IndeX Files 19-05-2020

S&P500 (Bullish above 2884.50)

From a technical viewpoint. The S&P is once again retesting the yearly pivot (2975.75) and the underside of the broken channel. With VWAP turned positive here, a break to the topside is still viewed though, with momentum studies showing strong bearish divergence, a drop lower cannot be ruled out. Bullish bias will remain intact while price holds above the monthly pivot (2884.50).

The IndeX Files 19-05-2020

FTSE 100 (Bullish above 6245.8)

From a technical viewpoint. The FTSE remains range bound within the bullish channel which has framed recent price action. Still supported by the monthly pivot, bullish conviction will be strengthened on a breach of the 6245.8 level where we have confluent resistance between VWAP, the channel top and the monthly R1.

The IndeX Files 19-05-2020

NIKKEI (Bullish above 19411.4)

From a technical viewpoint. The Nikkei continues to recover off the monthly pivot (19411.4) and is now once again retesting the yearly S1 20435.7 though still within the rising wedge formation for now. With VWAP supportive, a break above this level will put the focus on a run up to the yearly pivot (22313.5) next.

The IndeX Files 19-05-2020

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