Fresh Highs For Global Indices
Global benchmark equity indices are continuing to trend higher this week on the ongoing support from easier monetary conditions in the US and rising expectations of an imminent US-Sino trade deal. The October FOMC last week saw the Federal Reserve reducing its main cash rate by another 25 basis points, the third such reduction this year. With rates in the US now standing at lows of 1.75%, equities prices have been well supported seeing US indexes pushing on to new record highs this week. While the Fed noted that it is not expecting to ease further in the near term, the market is wary of downside risks and the potential for further easing rests highly on incoming US economic data ahead of the December meeting. Any significant US data weakness will likely see US benchmarks further supported as investors revise their December easing expectations higher.
Developments within the ongoing US – Sino trade negotiations are also keeping investors encouraged. The US and China are widely anticipated to sign a “phase one” trade deal this month. Expectations have increased further this week on the back from US Secretary of Commerce Wilbur Ross who said that the two sides are “making good progress” and the talks are “very far along”. Ross also spoke of the incoming approval of licenses for U.S. companies to sell components to blacklisted Chinese firm Huawei, which would mark a significant de-escalation of tensions between the US and China
European indexes are higher this week also as investors display a sense of relief, having averted an October 31st Brexit. With Article 50 now under extension for 3 months and with UK elections due in December, the risks of a no-deal Brexit have materially weakened, supporting both UK and European equities. The BOE will be closely watched this week given the recent shift in tone which has seen a key BOE policymaker noting the risk of a BOE rate cut ahead of Brexit. Investors will be eager to learn the bank’s latest assessment given the latest extension to Article 50.
Technical & Trade Views
DAX (Bullish above 12667)
From a technical and trading perspective. DAX continues to trade into fresh 2019 highs. With Longer-term VWAP positive, bias remains bullish in the near term. With momentum studies stretched to the topside, the monthly R1 at 13265.7 could see short term resistance though continued upside remains the preferred view.
S&P500 (Bullish, above 3031)
S&P500 From a technical and trade perspective. Market is recording fresh record highs here. With Longer-term VWAP remaining supportive any retest of the broken former highs at 3029.6 will likely find support, keeping the bullish bias intact.
FTSE (Bullish above 7233.4)
FTSE From a technical and trading perspective. FTSE is breaking higher again now. With longer-term VWAP positive again, the bias remains bullish in the near term. Monthly R1 at 7463.20 could seem some initial offers though bias remains higher here. Traders should note the potential for volatility later this week with the BOE on deck on Thursday.
Nikkei (Bullish above 22347.3)
From a technical and trade perspective. Price has broken out to new 2019 highs and is challenging the yearly R1 1t 23346.1 Expecting the bull trend to continue with any pullbacks to find bids into the retest of the broken trend line or slightly deeper around the monthly pivot at 21547.6.
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