Risk Rallies Following Suez Canal Solution

Global equities benchmarks have mostly started the week on a firm footing as news of a resolution to the Suez Canal crisis has been met with relief. A super cargo-carrier which ran aground in the key shipping-lane for 6 days caused a back-log of more than $30 billion in global trade goods, wreaking havoc on international supply chains and heavily disrupting shipping contracts. Equities had come under selling pressure late last week as the crisis worsened with some engineers suggesting it might be weeks until they could move the ship. However, following constant work over the weekend the ship has now been freed, returning the shipping-lane to normal service.

Aside from that issue, the global risk backdrop appears a little more favourable this week with the UK progressing through another stage of lockdown easing and the US continuing to make strong momentum with its vaccination push. While concerns are still lingering about a potential third wave of the virus underway in Europe, plans from Pfizer to dramatically increase its vaccine production have offset these somewhat, allowing equities to fund upside momentum once again.

Technical Views

DAX

The rally in the DAX this week has seen price breaking out above the 14783.12 level following the rebound off the 14411.90 level support. Price is now challenging the top of the bull channel which is holding as resistance for now. While above 14411.90 the near term bias remains bullish.

S&P500

The S&P is one again putting pressure on the 3964.25 level following the return of demand as price pierced below the rising trend line support once again last week. For now, the bias remains bullish however, bearish divergence in momentum studies suggests reversal risks with 3786.25 the big support level to watch.

FTSE

The FTSE is once again testing the 6803.1 level resistance following the bounce off the 6640.6 level last week. While price holds above that level, the breakout from the contracting triangle pattern remains intact, keeping focus on a further push higher in the near term, targeting 7025.8 next.

NIKKEI

The sell off in the Nikkei last week found support into a test of the 28372.5 level low, turning price higher once again. However, price is yet to surpass the 29749.1 level and is at risk of putting in another lower high, flagging reversal risks. For bears, 28372.5 is the key level to break.

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