Risk Appetite Weaker as Growth Concerns Take Hold
Global equities indices have started the week on a softer footing as investors continue to show risk aversion. As traders in Europe return to their desks after the Easter holidays, uncertainty around the ongoing conflict in Ukraine remains the biggest headwind for asset prices. Alongside this, we are also we are starting to see growth concerns growing in traction as a market focus point. Traders fear that the wave of central bank tightening we are seeing is going to hamper economic activity across the back end of the year, particularly as consumers battle with rising prices. In the US, recent flattening and inversion of the yield curve is fuelling concerns that the world’s largest economy is heading for a recession. With this in mind, we have seen equities prices pulling back from recent highs though, worth noting we are still well above the initial post-invasion lows we saw in early March.
Looking ahead this week, the main focus will be on a slew of PMI data due out of the UK, US and Europe across the back end of the week. Traders will be keen to see how much the supply disruption and higher input prices have impacted factory and non-factory sectors over the last month, which might weigh further on risk appetite if weakness is confirmed.
Technical Views
DAX
The failure at the channel top and 14791.27 level has seen the market reversing to trade back down beneath the 14170.79 level. With both MACD and RSI bearish here, the focus is on further downside while prices holds beneath this level, with 13672.31 the next support area to note.
S&P 500
The correction lower from the move above the 4575.50 level has seen the market trading down beneath the 4475.25 level. With both MACD and RSI bearish, the focus is on a further move lower to test deeper support at the 4421.25 – 4295.75 area, where we also have a retest of the broken bear channel.
FTSE
For now, the FTSE continues to hold above the 7558.7 level support. While we’ve seen a loss of momentum recently, with price continuing to hold near highs, the focus is on a further push higher near term with the 7792.1 level the next upside marker to note. To the downside, a break of the 7558.7 level will open the way for a test of support at the 7362.6 level next.
NIKKEI
The fall-back from the channel top and 28356.6 level has seen the market trading back down into the middle of the falling wedge formation, finding support at the 26932.1 level. With both MACD and RSI turned lower, risks remain tilted towards a test of deeper support and the falling wedge low. However, if bulls can get back above the 27422.9 level, this will alleviate near term bearishness.
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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.