Risk Appetite Healthy Ahead of Powell Comments
Looking across global equities benchmarks we’re seeing plenty of green during early European trading on Tuesday. It’s been a decent start to the week for most indices tracked here with broad gains seen against the backdrop of a weaker US Dollar. Some data weakness into the back end of last week saw yields losing some upside momentum, along with a correction lower in USD, which is helping lift bullish sentiment in equities markets.
Over the weekend, the PBoC issued a lower-than-forecast GDP target of 5% for the year ahead. While markets have been quick to shrug the news off for now on the back of recent Chinese data strength, we are seeing some caution in the FTSE which has been lower this week on the back of the news which caused a sharp drop in mining stocks.
Looking ahead this week there will be two clear focus points for traders. Firstly, we have Fed chairman Powell’s semi-annual two-day testimony which kicks off today. Traders will be carefully scrutinizing Powell’s comments ahead of the upcoming March FOMC. Then, on Friday we receive the latest set of US labour data. A bumper set of January figures ignited a fresh rally in USD, bolstering hawkish Fed expectations, and traders will now be looking to see if this strength continued last month or fell back.
Technical Views
DAX
The rally off the 15163.41 lows has seen the market trading back up to test above the 15642.76 level, trading new 2023 highs. Momentum studies are still quite flat though, with price now back above the bullish trend line, focus is on a continuation higher near-term.
.png)
S&P 500
For now, the S&P remains mid-range between the 3910 and 4153.50 levels. Price is currently testing the underside of the broken bull channel. With momentum studies close to turning bullish, the focus is on a continued push higher here and a challenge of the top of the range next.
.png)
FTSE
The index is hugging the bull channel lows and support at the 7904.7 level. Momentum studies have flattened here, suggesting two way-risk. However, while price holds above the channel lows the focus is on a continued push higher. Should we slip below here, however, 7678.8 is the next support to note.
.png)
NIKKEI
The rally in the Nikkei has seen the index breaking out above the bear trend line from last year’s highs and above the 27422.9 level. Price is now testing the 28356.6 level resistance and while this area is holding for now, the focus is on an eventual break higher in line with bullish momentum studies readings.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.