Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Rising Covid Cases Unnerve Investors

Published 26/10/2020, 09:24
Updated 14/12/2017, 10:25

European bourses start the trading steeply lower as the new week kicks off. Rising covis cases and tighter measures to stem the spread of the virus are raising fears that the fragile economic recovery will quickly be derailed. Fears of a double dip recession are overshadowing upbeat vaccine. Although reports that the UK government is considering reducing quarantine period for covid contacts is helping the FTSE, which hasn’t fallen as steeply as its European peers on the open.

The US and France recorded a record number of coronavirus cases, Spain announced a national curfew and Italy a partial lockdown. Meanwhile in the UK covid cases topped 23,000 with the North East and West seeing the biggest increase in cases.

Still, risk off is dominating as investors fret over the impact that tighter restrictive measures will have on economic growth. Riskier assets such as stocks are out of favour, whilst flows into safer havens such as the US Dollar are on the rise.

Not all bad news

News that the British government is considering a shorter isolation period, reduced from 14 days to 7 days for those who have been in contact with someone who tested positive is offering some support to the UK index, which hasn’t sold off as deeply on the open as its European counterparts

News that the Oxford University / AstraZeneca vaccine produces a robust immune response in elderly people, the group at highest risk is broadly being shrugged off by investors. As is news that the vaccine is likely to be distributed to NHS frontline workers and the most vulnerable in December.

A slow start to a busy week

Whilst covid is set to remain a key driver in the market this week, in addition to US elections and US stimulus negotiations, this week is also a key week for corporate releases with UK banks and 4 of the FAANGs reporting, in addition to other big names such as BP (LON:BP), Next (LON:NXT), GSK (LON:GSK) just to mention a few.

Looking ahead it is a relatively slow start to the week with just IFO Business sentiment in focus.

FTSE Charts

FTSE Chart

The FTSE trades -0.6%. It trades below its 50, 100 & 200 SMA on the 4 hour chart and below a descending trendline which has been in place since early June – a bearish chart.

Immediate support can be seen at 5760, today’s low prior to 5715, last week’s low.

Immediate resistance is at 5855 50 SMA prior to 5910/20 region where the 100 & 200 SMA sit. A move above 5970 is needed to negate the current bearish trend.

"Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.