US-Sino Trade Deal Hopes Keep Markets Supported
Though momentum has weakened recently, global equities benchmarks continue to trade higher this week as optimism over a potential US-Sino trade deal is keeping sentiment positive. Negotiators from both the US and China held further talks over the weekend aimed at keeping things moving. Following the cancelling of the APEC summit which was to take place in Chile November 16th /17th, the market is awaiting news of when the “phase one” trade deal will be signed. With both sides still engaged in talks, traders are remaining optimistic that a deal will be done soon.
Asian equities remain well supported by these trade war hopes also. However, given the track record of these negotiations, there is a still a risk that talks will fail and if a deal is not done by December 15th, the US has said that it will introduce new tariffs.
In the UK, the December elections remain the key priority. The Conservative party is still the favourite in recent polls, keeping focus on Johnson’s Brexit deal. However, with polls showing the Conservatives still wouldn’t get a majority vote, the chances of another coalition government remain elevated. As such, there is still a risk that we could see a no-deal Brexit if parliament is unable to back a deal by the January 31st 2020 deadline.
European asset markets continue to be supported by dovish ECB expectations as persistently weak data keeps the market expectant of further easing from the ECB. Lagarde has yet to signal what her monetary policy approach will be though most analysts agree that she is likely to continue Draghi’s policy of easing as recent data from the Eurozone continues to highlight weakness in the single market economy. Lagarde will speak on Thursday and her remarks will be closely followed by the market looking to gauge the likelihood of further easing in the near term.
Technical & Trade Views
DAX (Bullish above 12667)
From a technical and trading perspective. DAX is still held up against the monthly R1 at 13265.7 which remains the key topside level to break. With longer-term VWAP positive, bias remains bullish and any correction lower 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 broken above the monthly R1 at 3106.5 and continues to print new, record highs. 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 remains in consolidation mode 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 remained rather flat over the last week, still holding against the 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!