Fresh COVID-19 Fears Sink Equities
Benchmark global equities indices have seen a severe shift in sentiment this week. With many indices beginning to track lower into the end of last week, an escalation in concerns over the scale and impact of COVID-19 has seen indices gapping lower at the start of this week, with selling pressure continuing to build.
Recent reports have highlighted the growing severity of the outbreak with more than 70,000 cases confirmed globally and a death toll which is pushing into the mid-2000s. Worryingly, there has been a notable increase in the number of cases and deaths recorded outside of China. Italy has emerged as a focus point with over 150 cases reported there in recent days alongside six deaths.
The World Health Organisation has now supported recent Chinese reports which noted that the spread of the virus was slowing down though has warned that the virus could easily see a renewed outbreak. Worryingly, the WHO now notes that the rest of the world is at risk of a “pandemic” with the virus continuing to spread outside of China. The market is now fearful about the continued impact of the virus which has killed more than three times the number of people killed by SARS and in half the time.
With many travel restrictions and warnings in place as well as many towns and cities around the world on lockdown, there is a high degree of concern over the impact on the global economy which was already at its lowest level since the GFC due to the US-Sino trade war. As such, any weakness in forthcoming economic data releases is likely to lean heavily on risk appetite, taking equities lower still.
DAX (Bearish below 13185.68)
From a technical viewpoint. DAX has broken down below the rising trend line and below the monthly pivot at 13185.68. While still above the 12916.11 support for now, longer term VWAP has turned negative and continued losses could be seen unless that level holds .
S&P500 (Bearish below 3246.45 )
From a technical viewpoint. The S&P has seen a heavy bearish reversal in recent days with price breaking down below the bullish channel and below the monthly pivot at 3246.75. If price fails to reclaim the pivot here we could see a drop down to the monthly S1 at 3153.75 which bulls will need to defend to protect against a deeper correction towards the yearly pivot near 3000.
FTSE (Bearish below 7403)
From a technical viewpoint. The FTSE has broken below both the monthly pivot at 7403 and the yearly pivot at 7300. With longer term VWAP now negative, the bias is firmly bearish here. Unless the 7025.8 level an provide support, the yearly S1 at 6856.6 is the next downside level to watch.
Nikkei (Bearish below 23131.3)
From a technical viewpoint. Price has broken below the monthly pivot at 23131.3 and is now testing the cluster of support between the monthly S1 at 22860.8 and yearly S1 22303. With longer term VWAP now negative, unless price can recover here, a further push lower towards the yearly S1 at 20438.2 is seen.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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