All Eyes On The FOMC
It’s been a tentative start to the week for benchmark global equities indices. Over the weekend, an escalation in fears over the Omicron variant in the UK and Europe has created fresh investor uncertainty. In the UK, the PM announced fresh restrictions as a result of the uptick in new infections along with launching a push to get people boosted with a third dose of the vaccine. There are also fears that, should the spread of the variant continue to grow, further restrictions will be needed ahead of the Christmas period. In Europe, cases have been surging higher in key countries such as France and Germany, leading to similar fears of stricter measures being implemented there also.
Looking ahead this week, the main focus is on the Fed, BOE and ECB meetings due. In light of the increased concerns over Omicron, the chances of a rate hike in the UK appear to have been weakened dramatically. For the ECB, the focus is on whether the bank will look to extend asset purchases beyond the current March expiration date. In the US, despite Omicron, the market remains broadly in favour of the bank stepping up the pace of its monthly tapering operation which should help support USD in the near term, likely weighing on equities. The extent to which such a move will impact equities will depend heavily on the forward guidance given, specifically with regard to the dot plot forecasts.
Technical Views
DAX
For now, the DAX is sitting back above the bullish trend line from 2020 lows. The recent rally has been capped into a test of the 15743.01 level highs with price settling into a range between that level and support at 15473.83. While above the bull trend line, focus remains on further upside for now.
S&P 500
The S&P continues to hold just below the 4692.75 level which remains the key upside hurdle for bulls. Price has been held up by the level since early last month though, in light of the long-term bull trend, the focus remains on an eventual break higher with 4937.50 the next target for bulls.
FTSE
The market’s latest attempt at breaking out was once again cut short as sellers stepped in at the 7362.6 level to drive price lower. While 7241 holds as support, the focus remains on a continuation higher near-term, with 7444.3 the next level to watch. Below there, however, 7137 is the next support to note.
NIKKEI
The Nikkei continues to oscillate within the broad contracting triangle pattern which has framed the market over the few months. Currently, price is sitting atop the 28356.6 level, in the middle of the structure. While above here, focus is on a test of the 29464.9 level and triangle top.
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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.