The bullish session for EU shares continues
European shares traded higher on Monday, extending the bullish session registered overnight in Asia while US Futures stabilized following last week’s volatile sell-off on riskier assets. Market sentiment has clearly improved over the weekend as traders seem to have digested the upcoming monetary tightening from the Federal Reserve to combat inflation.
The “fear trading” mood has seen some usually expensive shares become much more attractive, which explains why so many investors have bought the dip. In addition, the fact that the Japanese Yen, the US Dollar, and global bond markets are trading lower, provides an interesting setup for bull stock traders this week. This also may be the sign that the sell-off was just a correction rather than the start of a real bear market. That said, EU stock investors are likely to keep their focus on macro data, as the highly anticipated meetings from the ECB and the BoE loom. Moreover, investors are also bracing for a new batch of corporate results from major companies from the tech sector like Google, Amazon, Meta Platforms and Sony due later this week.
Tech is the sector currently registering the best performance so far in both Asian and EU markets as investors look for a sharp rebound following last week’s panic moves.
However, Energy shares are likely to remain extremely volatile this week as oil and gas prices hover near record levels while geopolitical tensions continue to rise in Eastern Europe. Traders will remain cautious, as any significant breakthrough in NATO-Russia talks over Ukraine is likely to be seen as an occasion for the energy sector to pull back from its peak.
Pierre Veyret– Technical analyst, ActivTrades
The US dollar lost ground to other major currencies during early Monday trading, handing back some of last week’s gains ahead of a week dominated by central bank meetings. Dollar bulls appear to be cashing in on the profits generated last week, which was the best week for the greenback since mid-2021. As the conditions that propelled the US dollar to Friday’s heights remain in place -the Fed’s increasing bullishness, which, at least for now, remains largely unmatched by other central banks – there may be scope for more US dollar gains in the weeks ahead.
Ricardo Evangelista – Senior Analyst, ActivTrades
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