Corona-Virus Continues To Dictate Asset Price Moves

Ongoing developments within the corona-virus outbreak continue to dominate action in benchmark global equities indices this week. Early optimism regarding the prospect of a potential vaccine helped fuel a wave of buying across high yielding assets last week, however, this move was short-lived and has seen further reversal this week.

Global investor appetite remains in shaky territory given the continued spread of the virus which has now claimed well over 800 lives in China alone. With a vaccine yet to be discovered, the virus remains a global threat and is a clear headwind to global economic activity. The impact on the Chinese economic has forced the PBoC back into action in a bid to mitigate the damage caused by the lack of activity there. The bank is now expected to ease further in light of the ongoing spread of the virus which the WHO have said is still an “intense outbreak”.

Last week, risk prices were also bolstered by rising expectations of global central bank action to help buffer the global economy against the damage caused by the reduction in activity. However, these expectations have been reduced now on the back of a spate of better data which saw strong improvements in both UK and US manufacturing along with a host of other key US indicators.

Technical View

DAX (Bullish above 13185.68)

From a technical viewpoint. DAX is now retesting the monthly R1 at 13433.29, further supported by the rising trend line. With longer-term VWAP positive, a continuation higher remains the preferred scenario. Any move lower should find support into the monthly pivot at the 13185.68 mark.

The IndeX Files 11-02-2020

S&P500 (Bullish above 3246.45 )

From a technical viewpoint. Price is now retesting the broken monthly R1 at 3315, with the rising channel low providing confluent support, suggesting a continuation higher. Any retracement lower should find support into the monthly pivot at 3246.45.

The IndeX Files 11-02-2020

FTSE (Bullish above 7403)

From a technical viewpoint. Strong demand into the yearly pivot at 7295.3 saw the FTSE rallying higher, though selling kicked in just ahead of the monthly R1 at 7563.1. With longer-term VWAP still bullish, continue upside is expected while the market holds above the monthly pivot at 7403

The IndeX Files 11-02-2020

Nikkei (Bullish above 23131.3)

From a technical viewpoint. Price is still holding above the monthly pivot at 23131.3. While this level supported, the next level to watch is the monthly R1 at 24102.6 continues. However, If price moves lower from here, however, we could see some support into cluster of support between the monthly S1 at 22860.8 and yearly S1 22303.

The IndeX Files 11-02-2020

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