Stock Markets Trading Firmly Higher

It’s been a strong start to the week for global equities benchmarks with indices around the globe rallying firmly amidst the ongoing improvement in risk appetite. A combination of a weaker US Dollar, enhanced US fiscal easing expectations and general optimism linked to falling COVID rates and positive momentum in the vaccination effort, has created plenty of demand among equities traders this week.

The US Dollar has turned lower over recent sessions, driven by a string of weaker-than-expected data and the growing likelihood of Biden passing his $1.9 trillion stimulus package by March. The democrat president is currently busy pitching the plan and attempting to secure some republican votes in the senate to guarantee the bill passes. With polling showing that the plan has a high level of support among voters, and given the democrat majority in the upper house, the bill looks likely to be passed in the coming weeks.

On the vaccine front, with the UK and US motoring ahead with vaccinations, the current plans to facilitate a return to normal over the second half of the year look firmly intact. With traders eyeing the easing of restrictions from Q2 onwards, equities markets are seeing a steady boost in buying which looks likely to continue in the near term.

Technical Views

DAX

The DAX is once again testing the 1412876 level from below. This is a key, long-term level in the index and a break higher here would be firmly bullish. Though bearish divergence in momentum studies argues for caution, while price holds above the bullish trend line, the bias remains bullish.

S&P 500

The rally continues in the S&P this week with the breakout above 3868.25 continuing to gather pace. The index is now printing fresh, record highs and while the bullish trend line from 2020 lows remains intact, the outlook is in favour for further upside.

FTSE

The FTSE is continuing to claw its way back up higher this week. Following the rebound off the 6396.4 level, price has since broken back above the 6640.6 level and is now trading back up towards the 2021 highs. While 6640.6 holds as support, bulls will look to challenge the 7025.8 level next.

NIKKEI

The NIKKEI is now fast approaching a test of the top of the bull channel running from the 2020 lows as the breakout above the 29749.1 level continues to gather pace. While the market holds above here, the outlook remains bullish in the near term.

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