The economy has just begun to recover from the crisis caused by the spread of coronavirus infection. However, the market is now gripped by fears that the more contagious delta strain COVID-19 will slow the recovery rate and the situation will roll back to the early pandemic phase. We will discuss how the world indices react to such sentiments right now.
The third wave hits the economy
On July 19, amid panic about the approaching third covid wave, which cannot be stopped by the mass vaccination of the population, “bears” took over the market. Analysts say the increase in coronavirus cases will offset the positive impact of continued moderate financial inflows to emerging markets and a strong quarterly earnings season.
According to experts, we are witnessing a significant slowdown in income and economic growth that is already taking place. This was confirmed by the fall of the major stock indexes, which we saw on Monday. It will be fair to say that on Tuesday many of them managed to compensate for the drawdown.
The week started not in the best way: the Dow Jones Industrial Average (DJI) index decreased by 2.09%, having lost 724.56 points, the S&P 500 (SPX) – by 1.58% (68.53 points), NASDAQ Composite ( IXIC) – by 1.06% (152.2 points). The next day, the indices showed growth of 1.62%, 1.52% and 1.57%, respectively.
On Monday, the pan-European STOXX 600 (STOXX) index sank 2.3% (10.45 points), the German DAX (GDAXI) – 2.62% (407.11 points), the British FTSE 100 (FTSE) – 2, 34% (163.7 points), French CAC 40 (FCHI) – by 2.54% (164.11 points).
On Tuesday, the trend reversed, and the indices rose by 0.52%, 0.55%, 0.54%, 0.81%, respectively. At the time of preparation of the material, the upward movement remained: STOXX 600 added 1.14%, DAX – 0.5%, FTSE 100 – 1.39% and CAC 40 – 1.04%.
Asia Pacific Indices
On July 19, the Japanese Nikkei 225 (N225) showed a decline of 1.25% (350.34 points), the South Korean KOSPI (KS11) – 1% (32.87 points), the Chinese Shanghai Composite (SSEC) and SZSE Composite (SZSC) ) – by 0.01% (0.18 points) and 0.07% (1.74 points), Australian S & P / ASX 200 (AXJO) – by 0.85% (62.1 points).
The next day, only the Shenzhen Stock Exchange Index (SZSC) gained 0.18%. All the rest continued to move down: N225 – by 0.96%, KS11 – by 0.35%, SSEC – by 0.07%, AXJO – by 0.46%. Today, at the time of preparation of the material, only the South Korean index (KS11) kept the negative trend – by 0.52%. As for other indices of this region, they are growing, the average indicator is 0.9%.
Technical analysis of stock indices from Maxim Artyomov
Dow jones industrial average
“The Dow Jones index on the daily chart forms another upward wave and moves to a local maximum. At the current moment, the target for growth is the resistance level around 35 100. In the future, another correction from the indicated resistance level may occur. Considering that the quotes continue to trade. above the 200-day Moving Average, we can assume that after the rollback completes, the price will be able to break through the resistance and, having renewed the highs, continue the development of the upward trend.
“The S&P 500 index is forming another upward wave in the area of maximum values. The target for growth is the level of 4 400, the breakdown of which will indicate the continuation of the upward trend. The 200-day moving average, which is below the chart, is confirming the growth. continue the upward dynamics within the upward channel. “
“The NASDAQ Composite index as a whole behaves like most indices that are traded on the US stock market. Quotes continue the upward wave within the upward channel. The target for growth is the nearest resistance level at around 15,000. Refreshing highs may serve as a signal for continuation The uptrend is confirmed by the 200-day moving average, which is still below the chart and continues to rise. “
“The Stoxx 600 index, pushing off from the lower boundary of the channel, continues its upward momentum. Considering that the quotes have already tested the area of the resistance level twice, we can assume that the next test will end with a breakdown. In the future, the index may continue to rise. The 200-day The moving average, which is also showing an upward trend. The target for growth is the level of 470 “.
“Compared to the US and European indices, the Nikkei 225 continues to show a downward trend. At this stage, quotes are testing the support level in the form of a 200-day Moving Average. A breakdown of the Moving Average will be a signal for another downward impulse. support level around 26 900 “.
Summing up the result
At the beginning of the week, fears caused by the third wave of the pandemic triggered a decline in global stock markets. However, on Tuesday many of them managed to compensate for the fall. Analysts say about a slowdown in the pace of global economic recovery.
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