Equities Rally Following Powell Speech
It’s been a solid start to the week for global equities benchmarks. Asset markets have been broadly higher in the wake of Fed chairman Powell’s Jackson Hole speech last week. Powell gave a considered and cautious speech, refraining from giving any immediate tapering signals, which ultimately disappointed bulls and saw USD trading lower. While the Fed chair acknowledged that tapering by year end will likely be appropriate, his message was still a balanced once, highlighting the residual risks and uncertainty within the bank’s outlook. As a result, there was nothing to suggest that the market should expect tapering any time ahead of December, keeping the near term outlook for equities markets bullish for now.
Looking ahead this week, however, there are still big risks for equities traders. The next round of US labour reports on Friday will be closely watched. Following the bumper results seen for the prior month, if these readings come in above expectations also, we will likely see USD trading higher again near term, capping the current upside in equities markets. On the other hand, any weakness will likely see the current USD correction deepening, allowing for further upside in equities markets.
Technical Views
DAX
The recent retest of the 15743.01 level has seen the level continue to hold as support. Price has since turned higher once again is now close to challenging the 16015.97 highs. While RSI and MACD are turning higher here, it is worth noting bearish divergence into these highs, which suggest the risk of a pull back unless bulls can make a strong break higher here.
S&P500
The rally in the S&P has seen the index breaking firmly above the prior 4475.25 highs. With MACD and RSI both bullish here, the focus is on further upside in the near term, with the test of the bull channel mid point, the next technical area to focus on. To the downside, any slip back below the 4475.25 level will turn the focus to the 4383.50 level next.
FTSE
The FTSE is continuing to struggle around the 7137 level with risks that, a failure here will mark a lower peak against the 7241 high, raising the risk of a deeper reversal lower. MACD and RSI are turned lower here and if we do break down, the 6968.7 level will be the next support zone to watch.
NIKKEI
The Nikkei has seen a big move higher today with the index breaking out above the bear channel from YTD highs. Price is now fast approaching the 28356.6 level and with indicators turned higher here, the focus is on a breakout, putting the 29464.9 level in view as a target.
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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.