Markets Rocked By COVID Panic

Global equities benchmarks suffered a day of heavy losses yesterday as concerns over the growing second wave of COVID-19 took centre stage. New infections and COVID related deaths have been surging globally over recent weeks and have intensified further this week. In the US, the daily average of new infections reached a new record over the weekend while in Europe, many political leaders are warning that the situation is spiralling out of control. Span has issued a new state of emergency while Germany has warned that it is on the brink of losing control of the situation. The UK has progressed more regions into its highest state of lockdown this week with Italy also reintroducing regional lockdowns in a last-chance bid to avoid a further national lockdown.

While death tolls in these nations are still well off the levels seen during the first wave of the pandemic, from an economic viewpoint the major threat is the stress it is placing on health care systems and employment. Rioting in Italy and Spain over recent days, as well as protests in the UK, reveals the extent of the opposition to fresh national lockdowns which shows how complicated the situation is for governments. Traders are monitoring the situation day-by-day amidst fears that the measures in place will likely get stricter over coming months as the winter begins to set in and flu season begins in the UK and Europe.

Technical Views

DAX

From a technical viewpoint. The DAX has now broken below the bottom of the 12290.40 – 13322.69 range for the first time since July. The next support is at 11861.85 which, if broken, could pave the way for a much deeper rout in the DAX.

S&P500

From a technical viewpoint. The S&P is now sitting back on the 3391.75 level support following a failed retest of the broken bullish trend line. If price moves below here, the next big support level is down at 3226.50, a break of which would confirm the double top which is potentially setting up.

FTSE

From a technical viewpoint. The FTSE is now trading back within the local bearish channel having failed above the 5922.4 level. While below here, the market is vulnerable to a further move lower towards the next key support at the 5626 level.

NIKKEI

From a technical viewpoint. The NIKKEI remains supported by the local bullish channel and structural support at the 23273.6 level. While this support holds, the near-term bias remains bullish with the 24069.4 level the next upside target to note.

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