EUROPEAN SHARES
Stock markets surged significantly higher in Europe, extending the bullish trend seen in Asia, while US contracts also point to a firmer open after reassuring macro data provided a fresh boost to risk appetite.
The bullish sentiment initially resurged on Thursday, shortly after ECB President Christine Lagarde announced the European Central Bank may have gone high enough regarding interest rate hikes, opening the door to a dovish pivot which supported riskier assets everywhere in the region. In addition, investors welcomed another batch of reassuring macro data (industrial production, unemployment rate) from China early this morning as it seemed to highlight the efficiency of stimulus measures recently taken by Beijing.
However, even if the rise in EU and US stock benchmarks is leading prices close to their recent tops registered a few weeks ago, it may be a bit too soon to feel confident.
Indeed, the rise of the US dollar combined with the drop in US Treasury Yields can be seen as signs that risk is rising. The situation is slightly different regarding EU shares as, even if bond yields also trade to the downside, the drop of the single currency caused by the recent announcement from the ECB tends to support large exporting groups listed in major EU indices.
Technically speaking, the STOXX-50 has broken out of its short-term bearish trendline and now tests significant resistance at 4,316.0pts (78.6% Fibonacci), the last one before the 4,350.0pts mark.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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