Dow, Nasdaq, and DAX all up this morning on US-China trade talk announcements
Fundamental easing of geopolitical risks takes equities higher ahead of more market-moving data with NFP and Fed’s Powell speech tomorrow.
DOW: Surging as of this morning as risk appetite improves further
Technicals were in for a rude awakening in indices, as an easing of risks globally including Hong Kong’s extradition bill withdrawal, no-deal Brexit less likely at this stage, and this morning’s US-China trade talks all improving risk appetite and sending equities higher for the session. That has given this index’s technicals more positive bias, though given that its fundamentals that have driven the recent gains, any undoing of that could put those gains at risk. Furthermore, one can’t rule out more tariff hike announcements out of the US hoping to pressure the Chinese ahead of talks. In terms of bias, retail sentiment is 6% higher to a heavy short 68% as longs get enticed into closing out and shorts hold on.
NASDAQ: At its short-term resistance level as risk-on appetite undoes recent negative technical bias
Fundamental forces shifting technicals over the past 24 hours has occurred in most risk-related products, including this tech index, taking its price closer to its short-term resistance level as most of its main technical indicators shift back to neutral. Yet, trade talks alone don’t necessarily translate into action that’ll ease the concerns of companies reliant of the two countries’ economic relationship, and hence more will be needed to ensure the gains can stick. Retail bias has also increased here by 7% to a heavy long 69%, and well away from institutional bias of a long 60%. While conformist strategies are in line with the current technical overview, the fact that upcoming fundamental and significant US news means contrarian breakout strategies are likely to be more ideal heading into the event.
DAX: Buoyed by US-China trade talks but investor focus is on next week’s ECB
Indices globally are gaining as of this morning, with Asia heavily in the green on both the trade talks announcement and an easing of political tensions in Hong Kong. Although its more about Europe for the DAX, any potential easing of trade tensions between the US and China would aid the manufacturing powerhouse’s export oriented sector and aid its companies’ share prices in the process. More positive technical bias is forming in this index, even if the outlook in Germany is anything but bright as its economy is on the verge of a possible recession. But with yields at the lows and the hunt for returns getting tougher, ECB easing next week might give equities in the bloc a leg to stand on as money gets forced into riskier ventures.
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