Technical Analysis

Equities get another boost as China relents on zero-Covid policy

A softer US inflation reading yesterday was already a major catalyst for the stunning gains in Wall Street but confirmation that China is indeed easing its zero-Covid policy is very much a boost in its own right too. The idea of the latter has been floating about for over a week now but it looks like China can only do so much to deny that they have little choice but to pivot.

S&P 500 futures are now up 23 points, or 0.6%, and that is sparking a good start for risk trades ahead of European trading. Oil is also up 2.5% on the day to $88.35 as the re-opening trade gathers pace.

Going back to equities, things are looking pretty good right now so long as Fed speakers don’t come and spoil the party but I mean this is a market that has been desperate for just about anything to go its way over the last few months. Then all of a sudden, it has got quite a big backing now from the above events. That kind of optimism may be hard to shake off.

Upon the break of its 100-day moving average (red line) yesterday, the S&P 500 has room to roam to the upside – potentially looking towards its 200-day moving average (blue line) next:

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