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Brief: Dow Jones, DAX Index, Nikkei 225 Falls as Fear and Greed Rises

Global stocks are mixed today as investors remain worried about the rising number of Covid-19 cases. In Asia, the Hang Seng index has jumped by 0.78% while in Japan, the Nikkei 225 index has dropped by 0.35%. In the United States, Dow Jones and S&P 500 index futures are struggling for direction while European indices are relatively higher today.

Global equities mixed

Global equity futures mixed

Equities are mixed because investors are worried about the rising number of Covid cases, especially in Europe and the reduced chances of a new stimulus deal in US congress. Market participants are also focusing on corporate earnings from the United States.

This week, we have received mixed results from some of the biggest companies in the United States. On the one hand, banks like Morgan Stanley, JP Morgan, and Goldman Sachs have released relatively strong numbers. They have been helped by low bad debt provision and higher trading revenue. Other banks, notably, Wells Fargo and Bank of America have released relatively tepid results.

Later today, the Dow Jones and other indices will react to earnings from Bank of New York Mellon, Honeywell, VF Corp, and State Street, among others.

At the same time, the rising number of Covid cases has reduced morale among investors. Notably, in Europe, some countries have already started new lockdowns. Yesterday, London mayor announced new travel restrictions in the city. This came a few hours after Emmanuel Macron announced strict restrictions in Paris and other major cities. In Germany, Angela Merkel has revealed that the country could also be locked-down as cases rise.

In the US, Dow Jones futures are down by 40 points while those tied to the S&P 500 and Nasdaq 100 have fallen by 5 and 15 points, respectively. Meanwhile, in Europe, DAX index futures are down by 26 points while in the UK, the FTSE 100 futures have risen by 35 points. The closely-watched fear and greed index remains in the greedy zone.

Fear and greed index
Fear and greed index

Commodities lower

Sea of red in commodities

Meanwhile, the commodities market is also in the red. The price of crude oil has dropped by more than 1% even after the better-than-expected inventories numbers from the United States. Natural gas price has also fallen by 0.65%. At the same time, gold and copper prices have fallen while silver is in the green.

This price action in the commodities market is mostly because of Covid fears and the overall strong US dollar. Indeed, the US dollar index is relatively higher, which tends to put more pressure to the commodities industry.

Later today, the dollar will react to the US retail sales numbers and inflation data from the European Union.

Dow Jones technical outlook

The four-hour chart shows that the Dow Jones futures have been in an upward trend since September 25, when they reached a low of $26,521. They then rose to a high of $28,976 on October 12. The price has moved above the standard pivot point and is now slightly above the middle line of the Donchian channels.

It is also attempting to move above the ascending trendline that is shown in pink. Therefore, even with the current decline, I suspect that the Dow Jones will rise and possibly reach a high of $29,000.

Dow Jones technical chart

Dow Jones