Will US-Sino Trade Deal Be Signed This Week?
Global benchmark equities remain near recent high levels this week, though are sitting below the record highs seen over the last week as investors struggle with opposing themes.
The US outlook has shifted away from expectations that the Fed will ease further this year. Ahead of the October FOMC the market had been looking for one further cut in December. However, Fed Chairman Powell was keen to highlight that the bank will now be pausing any further adjustments. Strength in US data since that meeting has seen steady buying of the dollar which has tempered some of the gains in US equities.
However, investors remain encouraged by the ongoing US-Sino trade talks and expectations that the two sides will confirm a deal this month is keeping indices well supported. The upcoming APEC meeting in Chile this weekend is expected to see a deal signed, which will keep equities traders well supported. Any stalling, however, could be very bearish for equities in the near term as investors scale back their exposure to risky assets.
In the UK, the general elections campaign is the priority issue for traders. The latest polling results have highlighted that the two main parties (conservative and labour) are gaining over the smaller parties with the margin between the two having also grown. A conservative win raises no-deal Brexit risks once again and as such, the race is being watched closely by traders.
The latest set of EU economic forecasts released last week saw downward revisions, highlighting the fragile state of the economy. While Lagarde is not expected to ease further this year, traders are comfortable anticipating further easing next year, keeping European assets supported in the meantime.
Technical & Trade Views
DAX (Bullish above 12667)
From a technical and trading perspective. DAX has pulled back from 2019 highs. However, With Longer-term VWAP positive, bias remains bullish in the near term. The monthly R1 at 13265.7 remains the key topside level to break and any further correction is likely to find support as we retest recent broken highs.
S&P500 (Bullish, above 3031)
S&P500 From a technical and trade perspective. Price has paused for now at highs just ahead of the monthly R1 at 3106.5. With Longer-term VWAP remaining supportive any retest of the broken former highs at 3031 will likely find support, keeping the bullish bias intact while above the monthly pivot at 2981.6
FTSE (Bullish above 7233.4)
FTSE From a technical and trading perspective. FTSE has sold off from recent highs though with longer-term VWAP positive again, the bias remains bullish in the near term. Monthly R1 at 7463.20 remains the key topside level to watch and I am anticipating a break higher unless we break below the monthly pivot at 7233.4
Nikkei (Bullish above 22347.3)
From a technical and trade perspective. Price has stalled at a test of the yearly R1 at 23346.1. However, with longer-term VWAP still positive, 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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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.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!