US & European Equities Rally, UK & Asian Equities Fall

Global benchmark equities indices remain in stead demand this week for the most part. US and European equities are leading the pack, with a little selling pressure in UK assets as a result of a firmer British Pound recently.

The corona-virus episode which has dominated market news-flow this year is seeing a much diminished impact on equities prices. The scale of the outbreak has diverged from initial projections with deaths mainly contained within China. Equities have reversed initial losses in response to the outbreak and are now rallying across the board. Asian equities are starting to come under pressure however. The confirmation of virus cases in Japan, as well as over 400 cases onboard a Japanese cruise ship, has hit the Nikkei this week.

The recent uptick in manufacturing data (better UK and US manufacturing) has helped bolster investor appetite. Later this week, the market will receive the next round of manufacturing data for the UK, US and Eurozone. If these readings point to further strength, upside should be maintained within asset markets. However, as these next readings will more accurately account for the corona-virus period, there is a risk of weakness which would lean on equities at this point.

Outside of these manufacturing readings, ongoing news-flow around corona-virus will be the main market focus. We also have central bank meeting minutes due from the Federal Reserve and the ECB. These minutes have potentially lost a little relevance now given the developments within the corona-virus outbreak, though will still be of note to investors this week.

Technical View

DAX (Bullish above 13185.68)

From a technical viewpoint. DAX has broken above the monthly R1 at 13433.29 and with longer-term VWAP positive, a continuation higher remains the preferred scenario. Any move lower should find support into the monthly R1 at 13185.68.

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S&P500 (Bullish above 3246.45 )

From a technical viewpoint. The S&P continues to find further new highs. Price is moving solidly above 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 R1at 3315.

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FTSE (Bullish above 7403)

From a technical viewpoint. The FTSE is now testing monthly pivot at 7403. With longer-term VWAP still positive, we could see a bounce here. However, if we break below, bears will be looking for a challenge of VWAP next, just ahead of the yearly pivot at 7300.

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Nikkei (Bullish above 23131.3)

From a technical viewpoint. Price is still holding above the monthly pivot at 23131.3 for now with longer-term VWAP still positive. However, If price moves below here, we could see a drop back into the cluster of support between the monthly S1 at 22860.8 and yearly S1 22303.

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