Fresh Virus Fears Halt Equities Rally
Global equities benchmarks have seen a continued loss of upside momentum across recent trading as the market continues to grapple with the rising prospect of a second wave of COVID-19. Reports of renewed upward trends in new infections rates across some states in the US, including the country’s most populous state Texas, have led to the reintroduction of partial lockdown measures. The governor of California was forced to announce the closure of bars and restaurants in seven counties this week, including LA, as the virus begins to spiral once more.
China is also fighting a renewed outbreak of the virus leading to fresh lockdowns in Beijing and Wuhan while other countries such as Australia, Germany and the UK have also noted renewed, regional increases in the virus. The WHO has warned that the virus is now entering a “new and dangerous” stage and must be managed carefully. Should new infection numbers continue to creep up, the threat of wider lockdowns needing to be reintroduced should see equities prices continue lower.
The news of a renewed uptick in infection rates comes at a very challenging time for the global economy, which in many places is only just starting to emerge from lockdown. However, with countries like Brazil and India now seeing a signficiant first wave of the virus, there are plenty of global risks meaning that travel needs to be carefully managed. The UK is due to ease travel restrictions in the coming weeks though there are no details yet on what this will look like.
DAX (Bullish above 12400)
From a technical viewpoint. The DAX remains within the bullish channel for now, supported by VWAP. However, momentum has waned and the yearly pivot just ahead of 12400. Is acting as resistance. While price remains below here, downside risks are building.
S&P500 (Bullish above 2971.25)
From a technical viewpoint. The S&P is sitting in a tight range between the yearly pivot at 2971.25 and the 3115.75 resistance level. VWAP remains positive, keeping the near-term bias bullish. However, with price having failed to break back above the rising trend line, a downside break of the pivot could see a deeper reversal materialise.
FTSE (Bullish above 6000)
From a technical viewpoint. The FTSE remains within the lower half of the bullish channel from year to date lows, with the monthly R1 at 6328.2 holding as resistance for now. With VWAP still supportive, near term bias remains bullish though with momentum waning, reversal risks are building and a downside break of the pivot at 6000 would change this view.
NIKKEI (Bullish above 22291)
From a technical viewpoint. The NIKKEI is sitting below the rising trend line and has settled into a tight, shallow range underpinned by the yearly picot at 22291. With VWAP still positive, near term bis remains bullish while this level holds. Should price break here, however, the monthly pivot just above 21000 will be the next support to watch.
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