Market risk sentiment worsens slightly due to the increase in infections worldwide, especially in India, where the situation seems to be out of control.
The administration of vaccines in the West continues at a good pace. However, both in Europe and in the United States, the infection figures remain worrying, and mobility restriction measures have not yet been lifted in Europe.
U.S. stock markets
Yesterday the American stock indices suffered a significant fall, leading to a movement that for now can be considered as merely corrective from a technical perspective. However, there appears to be no fundamental reason, other than that derived from the evolution of infections, that could generate a greater correction.
Asian stock markets.
In Asia, the stock markets suffered bigger falls yesterday, as is the case with the Hang Seng index, which accumulated losses of three consecutive days (around 2.5%).
This index is again in a pivot zone around 28328. If it falls below this level, losses could accelerate to around 27,000. The 28328 area appears to be important, too, since the 100-day SMA line passes through there, currently acting as support.
European stock markets.
The European stock markets have also suffered corrections. Germany30 fell around 2.5% in the last three days.
In this case, concerns regarding Germany’s lockdown measures implemented and the high incidence of cases could be perceived as significant enough reasons to lead investors to involve in profit-taking. On the other hand, the delay in implementing the European fiscal stimulus package approved months ago could be an additional cause for concern, potentially delaying the recovery of the European economy.
Technically, the German index is still far from support zones or pivot points where the current trend would normally reverse. The two main technical support areas are at 14793 and 14429, still a long way from the 100-day SMA line currently passing through 14098. The RSI indicator is correcting from overbought levels, so it could still have enough room for correction.
Tomorrow's ECB meeting will not provide any additional elements that could affect the markets. No change is expected either in its monetary policy instruments or in its discourse, which will remain in the same direction as the previous ones.
Sources: investing.com, reuters.com.
The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.
As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.
The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.
JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors