FTSE 100, DAX and Dow on the rise ahead of Trump announcement

FTSE 100, DAX and Dow regain ground ahead of Trump stimulus plans. But will it last?

FTSE 100 gains start to ease off

The market seems to be entering a second stimulus phase, with fiscal measures now expected to come into play after monetary policy failed to lift market sentiment. The promise of action from US President Donald Trump has provided a boost globally, lifting the FTSE 100 back towards yesterdays high of 6239.

This does look like a retracement with the expectation of a widespread coronavirus pandemic ensuring that the wider outlook remains bearish. However, we could see further upside during this fiscal stimulus phase, with today's Trump announcement laying the groundwork for how markets will react to similar measures from other nations. For the short term, the bearish engulfing pattern points towards a move lower. However, there is a chance we are retracing as a precursor to another leg higher as we move in to close the gap. It all depends on whether this is simply a ‘buy the rumour, sell the fact’ move, or a precursor to further gains later today.

DAX turning lower after overnight gains

The DAX is easing back at the open, with the overnight gains starting to fade after a move into the 11,000 handle. With the stochastic oscillator breaking lower, momentum appears to point towards further short-term downside.

However, this is likely to be a potential retracement as we gear up for Trump's stimulus plan. Thus, while we do not know how markets will react to his announcement, it looks likely we will see some downside as a precursor to it. The wider bearish outlook remains in play, and ultimately any fiscal stimulus plans can only mitigate some of the potential impact of the virus if the Italian experiences become a blueprint for other Western nations. However, if markets do see a reason to buy heavily on today's announcement, the gap resistance of 11,421 appears to be a potential key resistance to limit to any such upward price action.

Dow Jones weakening as we await Trump's stimulus plan

The Dow Jones has been enjoying a rare period of upside, with markets anticipating a market positive raft of measures for Trump. However, the fact remains that this virus continues to spread, and fears of a global recession will likely maintain a wider bearish outlook until the spread of the coronavirus can be stifled.

With that in mind, further downside looks likely before long, yet we could see another bounce around Trump's announcement. A decline below 23,462 would be needed to mark the end of this upward retracement phase. Until then, there is a good chance we could see another move higher before long as we either close the gap or rise into trendline resistance.

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