Daily Market Report: Dow, Nasdaq, and DAX

Powell testimony takes equities higher ahead of earnings season

FTSE Source: Bloomberg

WALL STREET: Powell testimony takes equities higher ahead of earnings season

Equity flows have been dictated by monetary policy expectations, and with Powell’s dovish testimony Fed Fund Futures started pricing in more rate cuts, and as a result taking equity prices higher with some indices touching record highs. That is keeping this index’s technical overview bullish, but the lack of follow through still means that it’s stalling at the current mid-term resistance level. That will continue to test heavy short retail traders who are at a majority short 70%, while to the relief of extreme long institutional traders who have upped their bias to a staggering majority long 86%. Earnings season is the next key item to be on the look out for, provided tonight’s US CPI figures remain sedate.

WALL STREET Source: IG charts

WALL STREET Source: IG charts

US TECH 100: Fresh record high for the tech index as it breaches its mid-term resistance level

Tech stocks clearly outperformed yesterday, with the tech index powering higher to fresh record highs following Powell’s dovish testimony that gave further hopes of (more) future Fed rate cuts. That doesn’t bode well for heavy short retail traders who are at 72%, while institutional bias is a more modest 61% long compared to the extreme long bias in the Dow of 86%. While its money market expectations that are driving flows in equities, from a technical standpoint it remains a bull trend. Earnings season is next week, and the attention will shift to whether company earnings can match the increased valuations.

US TECH 100 Source: IG charts

US TECH 100 Source: IG charts

GERMANY 30: Not outperforming as trade risks, earnings fear, and uncertainty dent appetite

Trade risks between the US and the EU took a turn for the worse after Washington is set to look into France’s tax plans for digital companies, and with a German official’s comments on expecting US tariffs in several sectors. That will likely dent appetite for European shares, which could suffer falls similar to that of Chinese equities. The mood remains sour, data has been disappointing, and that’ll leave European equities in further need of ECB easing to maintain current levels. Meanwhile, while German 10-year yields have risen off recent lows, they remain in deep negative territory. From a technical standpoint it’s a stalling bull trend that’ll need little to shift to a more consolidatory outlook, while on the sentiment front, retail bias is shifting to the middle as averaged-in shorts see the recent price drop as a chance to take profit.

GERMANY 30 Source: IG charts

GERMANY 30 Source: IG charts


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