World Markets Today: Warning Signs Flashing in Big Markets

10 Jan, 2017 (7:46AM IST)

9 January 2017 (9:22 PM EST)

Global markets have started their new session with mostly red numbers in Asian markets today, as U.S. and European markets start flashing warning signs.

Both of these global trend leading markets closed negative yesterday ( exception was FTSE 100 of U.K. which gained on sterling’s fall).

U.S. markets showed dangerous weakness, especially Dow Jones which started with a gap down and closed at the lowest levels of the session overnight. It is quite a bearish signal. In the start of Asian session, U.S. and European stock futures are trading negative, indicating that the selling pressure is still in play.

DAX (Germany), as we had warned in our previous post, barely survived above its major support of 11,500 and that support may be tested again later in today’s session. Brexit fears are back and increasing pressure in euro zone.

Both Dow Jones and DAX are leading indexes and if these fall, global markets will quickly follow.

On geopolitical front, the Federal Reserve and the European Central Bank are in a hurry to wind up their quantitative easing (QE) programs, thus ending the free liquidity that has been fueling global markets. Political upheaval in the U.S. has been casting a shadow on global markets and I’ll not be surprised if  the ECB chief Mario Draghi pulls some more tricks on markets in the central bank’s meeting next week.

Technically, just as we had warned previously, both U.S. and European markets were creating some abnormal diversions on technical charts and it could result either in a positive breakout or a negative breakdown. At the time negative side is looking heavier in these markets.

Expect global markets to remain subdued, weak and choppy, Local cues are still dominating global markets but bigger negative numbers in U.S. stock futures, European markets may accelerate a negative trend in global markets today.

Good luck, enjoy the session!

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