EQUITY ANALYSIS AND NEWS

• S&P 500 | Set for Record High Test
• DAX | ECB Tiering Buoys Eurozone Banks

Source: Thomson Reuters, DailyFX

A strong week for equity markets as easing geopolitical (US/Iran) and trade (US/China) tensions support risk sentiment, and not to forget open-ended QE from the ECB to provide a helping hand. As such, the S&P 500 has breached the 3000 level with the record high now within sight.

S&P 500 | SET FOR RECORD HIGH TEST

The uptrend continues for the S&P 500, which looks to make a test of the record high at 3028. The index has been a benefit of the de-escalation of tensions between the US and China over the past week with several goodwill gestures being made by both the US and China. US President Trump alluded to the possibility for an interim trade deal being reached while China announced new US farm products to be exempt from the latest round of tariffs. However, while this latest progress may see this bounce in risk sentiment continue, China’s redlines remain (1) China want the US to remove all additional tariffs, (2) US target for goods to be purchased to match China’s demand and (3) the deal to be equal on both sides. That said, the tougher issues are unlikely to be resolved in the near future.

DAX | ECB TIERING BUOYS EUROZONE BANKS

The DAX had been among the best performing indices as the ECB unveiled its latest stimulus package, most notably the banking names as a tiered system had been announced. Consequently, the Stoxx 600 Banking index has continued to pick-up with the likes of Deutsche Bank being among the key beneficiaries with the BDB banking association stating that the ECB’s measures on German banks will reduce negative interest rate effects by EUR 500mln-1.9bln/year.

DAX CHART: DAILY TIME FRAME (FEB 2018 – SEP 2019)