Mixed Start for Equities

It's been a mixed start to the New year for global equities benchmarks. A combination of fresh COVID fears, and more medium-long term optimism has seen plenty of volatility already this week. Concerns over the economic impact of a fresh nationwide lockdown in the UK have been offset by optimism relating to the rolling out of the new Astra Zeneca - Oxford vaccine which started this week. The government has highlighted plans to have vaccinated enough people by the end of February to be able to end the lockdown cycle permanently.

In Europe, the DAX is trading a little lower on the week following a reversal from initial weekly highs yesterday. While vaccinations have begun in some countries, it is at a much slower pace, with France for example, having vaccinated less than 1000 people so far. The widespread lockdowns across the Eurozone are also leaning on sentiment in the first trading week of the New Year.

The S&P and the Nikkei are both trading broadly in the same fashion as the DAX with both indexes a little lower on the week following early rallies on Monday. In the US, all eyes are on the Georgia state senate run-off. There has been controversy this week over the publicising of a call between president Trump and a Georgia state judge where trump is heard asking the official to "find" over 11000 more votes. Should the Democrats win both seats in Georgia this would give them control of the Senate and increase the likelihood of much higher fiscal stimulus in the US. The Nikkei is lower this week in response to reports that the Japanese government is considering a new state of emergency lockdown to ocntrol surging COVID rates.

Technical Views

DAX

The reversal lower in the DAX this week has seen price breaking back down below the 13744.70 level. While below here, the market is at risk of a deeper correction towards the 13322.69 level support. this is a key pivot for the index, a break of which could signal the start of a broader decline.

S&P500

Following a few weeks of bearish divergence in momentum studies, the S&P has seen a break lower this week with the index moving back beneath the 3714.50 level. While below here, the index is vulnerable to a push back down towards the 3586 level. This level has previously seen strong buying and while intact, the near term bias remains bullish.

FTSE

The FTSE has rallied firmly off the 6518.2 level support this week and remains within the middle of the bullish channel which has framed the move off the December lows. The 6640.6 level remains the key resistance to break, above which the outlook turns firmly bullish again.

Nikkei

The Nikkei reversed lower from a test of the 2770.1 level resistance this week and is currently sitting on support at the 26949.5 level. This is a key level for the Nikkei, a break of which will open the way for a move down to the 26213.4 level next.

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