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Global Markets Recover, However, Risk Sentiment Barometer Remains Fragile

Global Markets Recover, However, Risk Sentiment Barometer Remains Fragile

Justin McQueen,
What's on this page

Equity Analysis and News

  • US Equity Markets Rebound
  • Cyclicals vs Defensive Stocks
  • FAANG Earnings May Extend Recovery

See our Q4 forecasts to learn what will drive price action through the quarter

Price200DMARSIIG Sentiment
FTSE 1007141743240Mixed
CAC 405087535930Mixed
FTSE MIB190922198238-
S&P 5002682276339Mixed
Nasdaq 1006885713139-
Nikkei 225218052242941-
Shanghai Composite2602301251-
ASX 2005830606745-
Hang Seng249792922945

US Equity Markets Rebound

Yesterday saw a notable rebound in US equity markets into the close with the DJIA moving towards the psychological 25,000 level, while the S&P 500 found support at the rising trendline from the 2018 low. The positive sentiment spilled into Asian equity markets with the Shanghai Comp and Hang Seng shrugging off the weak Chinese Manufacturing PMI, which shows an evident slowdown in the Chinese economy that continues to feel the pressure from the trade war environment. Supportive measures thus from Chinese authorities have failed to benefit Chinese bourses, which reside in a bear market.

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Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities

Cyclicals vs Defensive Stocks

In light of the recovery in US equity markets, the spread between cyclical and defensive stocks (Risk on Risk off Barometer) curbed its recent selling. However, unless there is a meaningful recovery in the spread, equity markets remain fragile.

Source: Refinitiv

FAANG Earnings May Extend Recovery

After US market hours, Facebook announced their latest financial reports, which were relatively mixed with the tech giant beating on earnings, although, missed estimates on revenue, daily and monthly average users. Despite this, Facebook shares are called to open higher by 3%. Elsewhere, eyes will be on Apple who are due to report after-market tomorrow, whereby option straddles suggest an implied volatility of 6.5% (Historical share price movement has been 3.8%).

Much like the S&P 500, the rising trendline from the 2018 low continues to keep the Nasdaq 100 afloat. However, risk sentiment continues to remain fragile with a move above 7000 needed to suggest a near term bottom.

Nasdaq 100 Price Chart: Daily Time Frame (Dec 2017 - Oct 2018)


--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.