Trading indices is a great way to get in on the action in a specific geographical zone or an industrial sector and benefit from its overall growth. Indices are also ideal investment vehicles when it comes to diversifying your portfolio.
It’s always vital to monitor the economic calendar and follow geopolitical issues to be better prepared for higher uncertainty and market volatility, enabling you to seize opportunities to profit, while protecting your trading capital.
Currently, the Brexit situation, a potential rate cut from the Federal Reserve, the ongoing trade war between the US and China, and disputes between the Trump administration and Mexico are all threatening serious consequences for global growth and are widely seen as the most important market drivers.
FTSE 100
The FTSE 100 index, also called the Financial Time Stock Exchange or the Footsie, tracks 100 of the largest companies from the United Kingdom. The FTSE has been the most important index of the LSE – London Stock Exchange – since 1984. For this reason, the index is a good representation of the overall health of the British economy.
Technically, prices are evolving above the 20-Day moving average and the FTSE might be forming a double bottom pattern. This could imply an imminent rise. After a week of rising prices, the index is now slowing down slightly. Whether or not it heads back up will depend on how the Brexit situation evolves.
Dow Jones
The Dow Jones Industrial Average, also called the DJIA, is one of the oldest indices. It is also the most popular American stock market index. As it gathers 30 of the largest American companies from almost every industry, it is the benchmark index investors monitor to gauge the strength of US economy.
During May, the DJIA went down to around 24,800 points before bouncing back during the first week of June. Since the beginning of the month, the Dow has strongly increased to reach over 26,000 points and prices are now evolving above the 20-day moving average with an RSI crossing above the 50-level towards the overbought zone.
MSCI Emerging Markets
Launched in 2001, the MSCI Emerging Markets Index includes more than 1,100 stocks from over 26 countries in 5 regions. As of March 29th, the 5 most important countries in the index are China (33%), Korea (13.02%), Taiwan (11.35%), India (9.16%) and Brazil (7.23%). These nations all have the potential to transform the global economic and investment landscape.
A few weeks ago, the index fell to its lowest level since January, before bouncing back slightly. Concerns about Chinese growth and its consequences for other Asian economies are weighing down the index, as are the ramifications of Beijing’s trade war with the United States.
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