FTSE 100 and Nikkei 225 Continue to Rise

May 02, 5:12 pm
FTSE, Indices

Global equities saw a notable rebound since the beginning of last week, following the first round of the French Election results.

Global equities added an average of 2%-4% each in few days, followed by a stabilization ahead of key economic releases and events later this week.

The main concern remains from France, despite the fact that the public polls are showing a clear lead of Macron with more than 60% of the votes, yet, we can't rule out the possibility of a shock.

Le Pan supporters have increased slightly over the past few days, and now she is slightly above 40%. However, equities are not worried as of yet.

Mixed Data From Europe Today

Even though the recent economic releases from Europe continues to support the ECB future plan, to decrease the pace of QE until the end of this year. Today, some of the data showed a slight slowing down.

However, today’s data were the final figures of last month's outcomes, which came slightly lower than the initial reading. Yet, this would be the first slowing down after multiple months of improvement. Therefore, they shouldn’t be concerned, and this is why European equities remained on the rise today.

FTSE Holding Above 7100

After the announcement of the general elections by the UK PM a few weeks ago, FTSE 100 declined all the way back to retest its 7100 solid support area.

The index managed to stabilize and jumped right after the announcement of the first round of the French elections, rising to as high as 7300.

As for today, the index managed to remain above its 100 DAY MA and so far it seems that we will see a close above that resistance. If so, that could be another sign for a continuation of the current bull run.

However, we can't rule out another short-term retracement, since the technical indicators has crossed to the downside once again. Such more is likely to be limited once again above the key support which stands at 7100.

Only a breakthrough that support would eliminate the bullish outlook, and may lead to another leg lower probably toward its 200 DAY MA which stands at 7035.

On the upside view, the 50 DAY MA would be the first immediate resistance to watch over the coming days, which stands at 7309. A break of which would clear the way for another run toward 7350.

Nikkei Recovering On Deflation

Earlier this morning, Japan’s Core CPI declined by -0.1% last month, despite the fact that the estimates were to rise again to 0.2% from 0.1%.

This is the first negative reading for Japan’s core inflation index since September of 2013, which means that the Bank of Japan might need to do more over the coming month to push inflation higher once again.

As a result, Nikkei 225 managed to recover above its 50 and 100 DAY MA on the daily chart, rising to the highest level since Mid-March of this year, nearing 19500 resistance area.

However, the technical indicators are heavily overbought, which keeps the chances for a possible retracement ahead. This time, the downside correction is likely to remain limited above 19000 which represents its 50 DAY MA and 200 DAY MA also stands around that area.

Only a breakthrough those levels would renew the downside outlook, which may lead to another leg lower back to Mid-April’s lows around 18250.

Otherwise, another bull run is highly possible, probably toward the previous top of this year around 19650. A break above that level would clear the way for further gains, probably above 19700 and 19800.

 
Nour Eldeen Al-Hammoury

Nour Eldeen Al-Hammoury has more than ten years of experience in focusing on foreign exchange and global economic developments, as well as central bank policies and intermarket analysis (global markets relationships). Nour Eldeen is a regular on many major TV networks (several times each) such as: BBC Radio, BBC World News, Al-Jazeera, Al-Hurra TV CNBC Europe, CNBC Asia, CNBC Arabia, Al Arabiya, Bloomberg, Russia Today, Dubai TV, Sama Dubai, Skynews Arabia, Qatar TV and Future TV News.