This week, benchmark global equities remain under heavy selling pressure as uncertainty over the new COVID strain, Omicron, continues to grip markets. Markets were roiled late last week in response to the first announcement upon discovering the new strain, which is thought to be more contagious and less responsive to vaccines than Delta and Beta.
Initially, this week, however, there was a pause in selling on Monday as world leaders urged caution, suggesting that it would take at least a few weeks before scientists could assess the real threat from the virus. However, with other cases popping up around the globe, it seems that traders are acting ahead of the curve and squaring riskier positions.
Given the tightening restrictions across Europe ahead of the new strain’s emergence, traders sense that the months ahead (particularly for the West heading into winter) are looking perilous. Several countries have now closed their borders once again in a bid to curtail the spread of the virus, with the US refusing to rule out further travel restrictions.
For now, the market is erring on the side of caution. At the same time, it awaits further details around the new strain, suggesting that near term, we are likely to see continued selling unless there is a significant shift in the narrative around the new variant.
DAX - Technical View
The near 8% breakdown below the rising channel has seen the DAX plummet back down to the 15078.83 level. While this level is holding as support for now, with both MACD and RSI bearish, there are clear downside risks towards the 14791.27 level next.