Risk Sentiment Stabilizes Following Monday's Sell-Off
Tickmill | Dec 21, 2021 07:12AM ET
Benchmark global equities indices are seeing better buying on Tuesday amidst a mild recovery in risk appetite. There is still a great deal of caution around the Omicron news flow. However, for now, it seems that sentiment has improved since the heavy selling we saw across the European open yesterday.
In the UK, the PM avoided adding new COVID restrictions ahead of Christmas, which has allowed for better trading in UK assets. While further restrictions have not been ruled out following the holiday, there is at least a sense of relief at having avoided restrictions ahead of the festive period.
Still, despite the slight rebound seen so far today, equities remain down from recent highs, and the near-term outlook remains vulnerable to fresh downside shocks. In Europe, the situation remains precarious, with increasing numbers of countries adding fresh restrictions and, in some cases, lockdowns.
New Zealand announced this week that it would delay its planned border reopening in the New Year while it assesses the risk from Omicron. In the US, plans to return workers to the office have been postponed in many regions due to Omicron, once again underscoring the uncertainty around the new variant.
Traders will be keen to receive the latest US core PCE figure on Thursday. A strong reading will no doubt give the US dollar a boost, weighing on equities as a result of bolstered Fed tightening expectations. However, given the holiday In the US and Europe on Friday, trading is expected to remain light.
h2 Technical Views - DAX/h2The DAX remains below the broken rising trend line for now, following the rebound off the 15078.83 level. Between there and 14791.27 is a significant support region for the DAX. While price holds above here, the longer-term focus is on a continuation higher. Below marks a bearish shift and will turn focus towards the 14170.79 level next.
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