S&P 500, DAX 40 Talking Points
- S&P 500 futures recover from four consecutive days of losses
- DAX rebounds off of recent lows, finds temporary support above 13,000
- Russia and Ukraine remain at the center of geopolitical risk but surging commodity prices pose an additional threat to inflation
Can Russia and Ukraine Reach a Diplomatic Solution?
The conflict between Russia and Ukraine has recently introduced a fresh bout of fear and volatility into the markets that has exacerbated inflationary concerns and has soured investor’s appetite for risk.
Over the past few weeks (since 24 Feb) rising geopolitical tensions and increased supply constraints have supported already elevated commodity prices, with both fear and risk aversion driving the price of equity indices lower.
Although the duration and severity of the war remains uncertain, additional risk events include the ECB interest rate decision and US CPI data which may pose as an additional catalyst for price action for the imminent move.
DailyFX Economic Calendar
However, as investors continue to price in the developments in the global economic backdrop, reports suggesting that the Ukraine may not proceed with the request to join NATO has resulted in a temporary optimistic shift in sentiment, allowing both the DAX 40 and the S&P 500 (SPX) to edge higher.
DAX Technical Analysis
After falling into an official ‘bear market’ earlier this week (posting a 20% decline from the November 2021 high), the DAX 40 index has managed to temporarily recover a portion of recent losses, allowing bulls to temporarily gain control over price action above the key psychological level of 13,000 which continues hold as critical support.
As prices now remain above the 13,297 Fibonacci level (the 23.6% retracement of the 2020 – 2021 move), the CCI (commodity channel index) is pointing higher but continues to threaten oversold territory. For now, the next level of resistance remains at 13,800 which opens the door for the March open at around 14,400.
DAX (DEU40) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
S&P 500 Technical Analysis
Meanwhile, after four consecutive days of losses, S&P 500 futures have managed to find support above the 4,188 Fibonacci level in an effort to drive prices back above trendline resistance, currently holding at the key psychological level of 4,300
| Change in | Longs | Shorts | OI |
| Daily | 4% | 14% | 9% |
| Weekly | 27% | -13% | 3% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
