Despite the uncertainty ahead of the holiday period, it hasn’t been a bad start to the year for markets. Benchmark global equities indices are trading broadly higher this week as markets appear to be downplaying Omicron risks as we kick off Q1.
With several recent data sets and studies confirming that the variant is a milder strain than its predecessors, there is hope that countries will be able to avoid the sort of widespread lockdowns we saw over Q1 2021.
While infections are still soaring in many regions, including the UK and continental Europe, many projections expect the current wave to peak in the next few weeks, hoping that the pandemic is now entering its final stages, given the much milder strain.
With this in mind, markets are likely to refer back to underlying fundamentals as we push ahead into Q1. The key themes in focus as we kick off the year are inflation, supply-chain issues, and central bank tightening expectations.
With price pressures still decidedly elevated and supply chain issues still causing havoc, many central banks face the question of how to balance tightening requirements while still keeping consumers supported.
For equities markets, in the near term, the outlook remains favorable as current conditions are likely to see higher asset prices as Omicron risks continue to diminish.
DAX Technical View
The DAX is currently once again testing waters above the 16015.97 region. With MACD and RSI turned higher here, the focus remains on the further upside while price holds above this level.
To the topside, the next marker to watch is the 16292.21 level. On the downside, 15743.01 is the following support to watch, with the rising trend line in that region.