Market Analysis

Stocks in Europe higher – DAX best performer today

Stocks in Europe opened higher on Friday, extending gains from Asian shares as investors remain optimistic ahead of the weekend. The risk-on mood is holding sway despite yesterday’s negative US unemployment figures as well as last night’s disappointing GDP release from China, which led to increased volatility. This optimistic wind has been triggered after President Trump outlined a structured plan, welcomed by investors, regarding the re-opening of the US economy. Investors particularly liked the fact the country will reopen in stages, in a state by state manner, instead of ending lockdowns measures everywhere at the same time as this is seen as the best way to get the economy back to normal and avoid the likelihood of a second peak of COVID-19. However, this risk-on trading stance remains fragile and strongly depends on each day’s news with corporate earnings likely to play a big role in determining sentiment. The earning season continues with more large European companies publishing their Q1 results next week with investors still struggling to evaluate the hit of the virus crisis to corporate results. As a result, this could lead to profit-taking moves before today’s closing bell.

The DAX-30 Index of Frankfurt is the best performer so far after the market opened with a solid 200-point bullish gap this morning. The 21-day moving average is going up, acting as a support for the price in the process, while the RSI indicator is showing significant bullish pressure with room to progress further. The market is now trading above 10,600pts and is likely to head towards the 10,790pts-10,880pts zone today (50% Fibonacci) but bearish corrections may take place below that level ahead of the weekend.

Pierre Veyret– Technical analyst, ActivTrades

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