Benchmarks in Europe are struggling to extend yesterday’s gains, which was sparked by optimism about a possible vaccine against Covid-19. However, yesterday’s euphoria is now nuanced by today’s uncertainty as investors brace themselves for the Fed Chairman Jerome Powell’s speech, which will provide them with more clues on the state of the recovery and the next action to be taken by the US central bank. In addition, today’s market sentiment is also being tainted by the deteriorating relationship between the US and China, especially after the Nasdaq exchange unveiled new IPO rules that limited the listing of Chinese companies. Traders expecting a response from Beijing are then likely to limit their exposure to stocks and take any profit following yesterday’s rally. With that in mind, we expect markets to stay volatile but without clear direction until Jerome Powell’s speech.
The FTSE-100 Index is today’s best performer as traders welcomed the government’s announcement of tariff cuts worth £30 billion after Brexit. The market is still trading well above 6,000pts despite a failure below 6,080pts. The bullish movement is slowing down, as shown by the Stochastic indicator, and a fall below 6,030pts could drive prices back to the range between 5,945 to 6,000pts. On the flip side, if the index clears 6,080 then 6,125pts and 6,210pts would be the next targets.
