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European Shares Await Year-End FOMC MeetingEuropean shares traded sideways on Wednesday as investors held their breath ahead of the last FOMC meeting of the year. The STOXX-50 index still trades inside its narrow range between 4,5330.0pts and 4,550.0pts, with patchy performances across all sectors. At the same time, investors await further monetary developments following yesterday's US inflation reading that took some by surprise. While the YoY US CPI data came out at 3.1%, just as expected, investors were disappointed to see a 0.1% increase compared to November, which had an immediate bullish impact on the US dollar, undermining hopes of a quick dovish switch from the Fed. That is why today's FOMC meeting will be crucial and probably shape market sentiment for the rest of the year. Investors, supported by cooling inflation over the last few months, have already largely priced in a monetary dovish turn from the Fed. This puts them at risk as Fed Chairman Jerome Powell may choose to temper strong dovish expectations, keeping the doors open for the "higher for longer" narrative, especially following yesterday's CPI report. If that happens, a sharp downside price action could quickly occur on equities, likely driving benchmarks towards a correction zone before the year's end. On the other hand, no significant hints from today's meeting could keep the current status quo alive on stocks, while of course, any dovish semantic should fuel market sentiment and drive share markets to new highs. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
European Stocks Open Mixed Amidst Risky Week AheadFollowing a patchy trading session in Asia, European stocks opened mixed on Monday as investors brace themselves for a risky week. The STOXX-50 index still trades well above the 4,500.0pts mark despite its failure to clear the 4,535.0pts resistance, as gains in healthcare and industrial shares are offset by losses from the consumer non-cyclical, energy and basic materials sector. The market lacks direction for the first exchanges of this new trading week, and investors are waiting for an extremely busy macro calendar in the next few days. In addition to the new batch of key macro data such as PMIs and inflation rates, traders will pay close attention to the decision on rates from the US, EU and UK this week. This week's challenge for investors will be to confirm their hopes of a monetary dovish turn to come. Many have already priced it in, and this sentiment still prevails even if the solid US employment data seen last Friday has slightly tempered the amplitude of rate cut expectations. Volatility will likely increase significantly throughout the week, even though most benchmarks remain well-oriented. The STOXX-50 index still trades inside its mid-term bullish channel, with both moving averages rising, while the DMI shows a directional price action inside a bull environment. The 4,610.0pts zone should be seen as a strong resistance level if the market clears the 4,535.0pts and 4,55.0pts marks. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
Stock indices climbed higher in the EurozoneStock indices climbed higher in the Eurozone, alongside US futures contracts, as investors brace for the US jobs report. Risk sentiment is on the rise everywhere in Europe this morning, with consumer cyclicals, industrial, energy and tech shares leading benchmarks higher towards new resistance levels following this morning’s German CPI data that came in line with expectations, and ahead of key macro developments in the US this afternoon. All eyes are on the US employment sector as investors await further signs of cooling that could lead the Fed to confirm the monetary dovish switch many have already started to price in. The nonfarm payroll is expected to show more job creations compared to last month (180K exp. vs 150K prev.) alongside the average hourly earnings, which is expected to go from 0.2% to 0.3%. Meanwhile, the unemployment rate is estimated to remain at the same level: 3.9%. Like always, any number outside the “expected vs previous” window would likely cause a sharp price action in major FX pairs, treasuries and equities. However, with many anticipations of a cooling US economy already well on the table, NFP and average hourly earnings figures better than anticipated could dramatically reverse market sentiment across this wide range of assets, opening the door for a sharp short-term correction on stocks. On the technical front, the STOXX-50 index is trading closer to its 4,500.0pts resistance, still inside its mid-term bullish channel. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
European shares rebounded after an initial dip on ThursdayEuropean shares quickly bounced back up after opening lower on Thursday, as market sentiment was shaken overnight by hawkish monetary hints in Japan. Some investors have been caught by surprise after BoJ Governor Kazuo Ueda hinted towards the end of the negative rates era in Japan, where the sparks of a more hawkish approach had a ripple effect across a wide range of assets like JPY pairs, of course, but also treasury and equity markets. This volatile price action will likely be a very short-term turbulence for EU stock traders as the market quickly defended support zones established recently as the STOXX-50 index remains above the 4,460.0pts mark. Of course, there is still room for a more significant correction towards 4,445.0pts or even lower around 4,430.0pts, without threatening the mid-term bullish trend, but there is a high chance trader focus will switch back to the macro developments. Indeed, on top of today’s EU GDP data, US employment figures loom tomorrow, while bets of a more dovish approach from the Fed and the ECB stay well on the table before next week’s FOMC and ECB’s rate decisions. We expect the market to remain volatile without a clear direction before this news. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
Stocks edged higher in Europe on WednesdayStocks edged higher in Europe on Wednesday, extending gains registered in Asia overnight, as the prospects of a monetary dovish switch bolstered market sentiment. In Europe, investors continue cheering on the recent dovish hints provided by ECB officials. Market sentiment towards riskier assets has significantly improved since historically hawkish central banker Isabel Schnabel confirmed inflation had slowed significantly, paving the way for the ECB to end its tightening campaign. Another bullish leverage to stocks came from softer than anticipated US readings regarding employment, which also opens the door to a more dovish monetary policy in 2024, as the Fed will likely want to support a cooling economy to avoid a potential recession. Of course, these are only anticipations so far and need to be confirmed with next week's FOMC meeting. But risk appetite remains high for now despite this morning's disappointing German factory orders data. Market volatility isn't likely to slow down as traders brace for today's US ADP Nonfarm employment change, another decision on rates from the BoC, and the US crude oil inventories later in the afternoon. Technically speaking, the STOXX-50 has now hit a crucial long-term resistance at 4,465.0pts (38.2% Fibonacci Daily Fibonacci extension). A pull-back to the newly established floor over 4,430.0pts may take place before potentially reaching new highs. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50Long
by ActivTrades
Tuesday's European Stocks: Modest Opening GainsStocks climbed slightly before paring some of their gains at the opening of Tuesday’s trading session in Europe, while Asian shares closed in the red, as macro data led market sentiment sideways. The STOXX-50 index still trades inside its consolidation zone between 4,400.0pts and 4,430.0pts. Investors are experiencing patchy performances across all sectors as they struggle to reconcile positive dovish hints from ECB official Isabel Schnabel with the debt situation in China, which remains a dark cloud for equity traders. In addition, even though US PMI and JOLTs data may increase market volatility in the afternoon, the “wait and see” stance will likely continue as investors brace for the crucial US jobs data due tomorrow and Friday. Meanwhile, a particular focus should be maintained towards central bankers’ speeches, as traders need to check whether their dovish expectations will be confirmed. Technically speaking, no directional price action will be expected if the market keeps trading within its 30-point wide range. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
European Equities Hold Steady Amid Mixed Risk SentimentEquities traded sideways in Europe on Monday amid mixed market sentiment towards risk ahead of a significant batch of new macro data this week. The STOXX-50 index drifted shortly after the opening bell before bouncing back as gains in consumer non-cyclicals, industrials, and real estate shares offset losses seen in basic material and energy stocks. Investors’ appetite for risk remains, however, fragile for two reasons. This week’s macro agenda is busy, with most traders waiting for PMIs and ISM data from the US, UK and EU while a batch of US job data looms. Investors will also wait and see where economies are going, checking that the anticipations that drove the autumn rally were on point before adjusting their portfolio’s exposure to risk. The second reason is technical: as previously mentioned, the market has already gone a long way up since its rebound at the end of October. With the impact on key resistance levels, investors may want to consider taking out some profit while waiting for this week’s macro developments. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
European Shares Rise on Improving PMI ReadingsYesterday, the values of the PMI index (it is characterized as a leading indicator of industrial production and services) for European countries were published: → in Germany: fact = 42.3; expected = 41.1; a month earlier = 40.7; → in France: fact = 42.6; expected = 43.2; a month earlier = 42.6; Although the index values are below 50, indicating a contraction in the economy, the dynamics are encouraging. Thus, in France, the index stabilized after a series of declines. And in Germany, the index is consistently growing after a minimum of 38.8 in July. In this way, business is reacting to the fact that the ECB may have reached the peak of increases and monetary policy will not tighten in the future. At the same time, the ESX50 index of 50 European shares gained bullish momentum and reached its highest levels since mid-August. Equity market participants may be feeling strongly positive about the rally of more than +9% in less than a month. However, the daily chart of the ESX50 shows that price dynamics allow a structure of trend lines (shown in blue) to be drawn, reminiscent of a Gann fan. And what's interesting is that the current value has reached an important line (shown as thickening) in this structure, which can serve as resistance - as it did more than once during the period from April to July. Given that the RSI indicator is forming divergence in the overbought zone, it can be assumed that the market is vulnerable to a pullback. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
FXOPEN:ESX50
by FXOpen
1
European benchmarks opened without clear direction on Thursday European benchmarks opened without clear direction on Thursday after mixed macro data failed to bolster market sentiment ahead of a long weekend in the US. Lower transaction volumes and decreased market volatility traditionally occur during the long Thanksgiving weekend, when US investors stay away from their trading desks. In addition, the recent batch of mixed macro data with poor PMI figures from France and better-than-anticipated ones from Germany didn’t help lift or drop market sentiment in the region. The pan European STOXX-50 index opened mixed, with gains in healthcare, basic materials and energy offset by losses in consumer non-cyclicals and tech shares. The market is trading with muted volumes, close to its major short-term resistance around 4,350.0/4,355.0pts as the bullish momentum keeps cooling. Despite another slew of incoming European macro data today, with the Eurozone PMI alongside speeches from ECB and Bundesbank officials, we don’t expect the market to register any sharp or directional price action for the end of the week. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
Stock markets traded slightly higherStock markets traded slightly higher but remained in their consolidation zone on Wednesday, as risk appetite seems to take a break ahead of the last batch of economic data before Thanksgiving. European benchmarks are trading sideways, with the STOXX-50 index still inside its 20-points wide trading range, after yesterday's release of the FOMC minutes, alongside the speech from ECB President Lagarde, failed to bring more direction to equities. The minutes from the last FOMC meeting indicated that the Fed would remain cautious with its next moves regarding rates. This may temper the dovish expectations of investors, even though it only has a limited impact so far. Investors are now likely to keep their eyes on the December meetings from both the ECB and the Fed, hoping for a significant switch of semantics from central bankers. Meanwhile, the focus should be on macro data, especially with today's Eurozone consumer confidence, the US initial jobless claims, University of Michigan consumer sentiment, and durable goods orders. The Stoxx-50 index trades above its moving averages, close to its 4,350.0pts resistance following a slight rebound supported by consumer non-cyclical and real estate shares, while the RSI indicator continues displaying a cooling bullish momentum. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
Equities continued to consolidate on Tuesday in EuropeEquities continued to consolidate on Tuesday in Europe, following a mixed trading session in Asia, as risk appetite lost momentum. Most benchmarks traded sideways from Frankfurt to Madrid this morning, with gains in the industrial and basic material sectors offset by losses in financial and energy shares. Not only have markets become less directional since the beginning of the week, but volatility has also decreased, highlighting the current slowdown in risk appetite. The big question in investors’ minds is: are equity markets set for a correction following a three-week rally, or is the current consolidation just a breath before reaching new highs? Technically speaking, the scenario of a coming correction prevails, as the price action currently diverges with the RSI indicator, which also already shows a break-out of the bullish dynamic trendline. However, the macro front tells another story. With today’s release of the minutes of the last FOMC meeting and a speech from ECB President Christine Lagarde, investors may also prefer to sit back and wait for further developments on the monetary front before adjusting their exposure to equity markets. The dovish narrative has now been largely priced in, and some investors are starting to think that one cooler-than-expected inflation print cannot be sufficient to reverse market sentiment completely: it will need to be confirmed by central bank officials. The STOXX-50 index keeps trading sideways between 4,350.0pts and 4,330.0pts, with 4,385.0pts as the next major resistance, while 4,300.0pts can be seen as a key support for the market. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
2
European Markets Open Mixed on MondayShares markets opened mixed in Europe on Monday, holding gains ahead of further macro developments this week. Market sentiment fluctuated this morning, as losses in Germany due to the sharp price action in Bayer, were offset by gains in Paris and Madrid. Even if equities started the week without direction, risk appetite remains high from investors as the dovish narrative started two weeks ago remains in place. Traders and investors are now focused on the release of the FOMC and ECB minutes of their last meetings, while speeches from many central bank officials, including ECB President Christine Lagarde and BoE Governor Andrew Bailey, also loom this week. Elsewhere, geopolitical tensions remain an uncertainty driver for equity traders, especially after a vessel was seized by Houthi rebels in the Red Sea. This raised concerns of an energy supply disruption, which drove the sharp price action in the energy sector this morning. On the technical front, the STOXX-50 index still trades above the 4,330.0pts level despite an ongoing bearish divergence between prices and the RSI indicator, highlighting a rally slowdown. The break-out of the newly established support level could open the doors to a correction towards 4,300.0pts and even deeper. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50
by ActivTrades
European shares rose on FridayEuropean shares rose on Friday, despite Asian benchmarks closing in the red, as investors brace for Eurozone’s CPI figures. The sell-off in Asian Equities due to the US-Sino trade war resurgence didn’t spread to European contracts on Friday, as investors continued to cheer on the prospect of a much more dovish monetary policy to come. Indeed, cooling inflation, bad economic data and lower oil markets all tend to fuel hopes of a significant switch in central bank monetary policy. Speaking of inflation, most traders now have their eyes towards the next reading coming from the Eurozone to see if what they saw last week in the US will also be confirmed on the old continent. Analysts also expect a significant drop here, with a 2.9% projection compared to 4.3% last month. Again, if these figures regarding the deceleration of price pressure were to be confirmed, or are even surprisingly better, then we should expect the current rally to continue further as risk appetite will likely grow more. This scenario is currently getting priced in as the STOXX-50 index briefly traded above its short-term resistance at 4,330.0pts, with the 4,350.0pts zone now in sight. Elsewhere, investors will also pay attention to today’s US housing starts data alongside speeches from Fed officials, while the spectre of a deadline regarding a deal about the government’s funding is slowly coming back into the spotlights. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50Long
by ActivTrades
European markets fluctuated on ThursdayEuropean markets fluctuated on Thursday as bullish sentiment took a break while holding recent gains. The equity rally spurred by dovish bets following cooler-than-expected inflation reports has now widely spread. Following sharp price rises on most benchmarks and a weaker US dollar, many traders have taken out profit, leading to some consolidation or slight pull-backs on those markets. In addition, investors and analysts have also started wondering what the Fed’s reaction would be to the recent CPI data at its December meeting, as inflation falling faster than expected may push its members to reconsider the “higher-for-longer” narrative. That said, most stock benchmarks remain well-oriented as pull-backs remain limited. The STOXX-50 index climbed higher since the opening bell, as solid gains from utilities, industrial and real estate shares offset losses in the energy and consumer cyclicals sector. The market still trades above the 4,300.0pts zone, on its way to challenging the 4,330.0pts resistance for the second time. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50Long
by ActivTrades
Stocks rallied in Europe on WednesdayStocks rallied in Europe on Wednesday, with a fresh boost to risk appetite as dovish bets resurge. Market sentiment towards risky assets strengthened significantly after investors witnessed softer-than-expected inflation readings in the US yesterday and in the UK this morning. These reports relieved stock investors, who now have more clarity on the likely path of monetary tightening from the Fed and the BoE. With the prospect of a peak in the rate hike cycle and even growing bets of rate cuts in the first half of 2024, stock traders have been given the green light to increase their exposure to equity markets. Cooling inflation is the signal many have been waiting for, and while we must wait for the December meetings to confirm the future of monetary policies, the news should provide strong support for stock prices. However, EU investors aren’t out of the wood yet as the EU CPI report still looms on Friday. This bullish shift can be seen technically, as the STOXX-50 index cleared two major daily resistance levels in a few hours and is now trading well above the 4,300.0pts level. The next big resistance is around 4,385.0pts, while intermediary zones are located close to 4,330.0pts and 4,350.0pts. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50Long
by ActivTrades
Stock benchmarks registered modest gains on TuesdayStock benchmarks registered modest gains on Tuesday, extending the sentiment seen in Asia overnight, with investors bracing for today’s crucial US inflation data. As previously said in our last report, market sentiment towards risky assets has lost a bit of its direction over the past few days after Federal Reserve officials expressed mixed hints about the future of monetary policies. With traders and investors worldwide not knowing what to believe, they will likely turn their focus back to data, making today’s inflation print crucial. Simply put, if the cooling of rising price pressure is confirmed with today’s data, the prospect of a less aggressive stance from the Fed could become a reality, likely boosting appetite for stocks. On the other hand, CPI data showing inflation remains stubbornly high would negatively impact price action towards equities, opening the way for a deep correction on most benchmarks following the rally that started at the end of October. The first scenario is currently being priced in as the STOXX-50 index challenges a major daily resistance at 4,240.0pts, driven higher by basic materials, healthcare and consumer cyclicals. Pierre Veyret – Technical analyst
ACTIVTRADES:EURO50Long
by ActivTrades
Morgan Stanley Analysts Raise Forecasts for S&P 500According to them: → the price of the S&P 500 index will reach 4,500 at the end of the year (previous forecast = 4,200); → the dollar will continue to remain strong. According to Goldman Sachs analysts, published yesterday, the price of the S&P 500 index will fluctuate around current levels, forming a consolidation zone. That is, a decline in the S&P 500 is not a priority scenario. An important test that will provide more important information about current market sentiment will occur today: US inflation data will be published at 16:30 GMT+3. According to forecasts, it will slow down from 3.7% to 3.3%. In anticipation of news, E-mini S&P 500 index futures are showing reduced volatility. If inflation data gives rise to bullish momentum, it is possible that the price of the S&P 500 will move up, pushing off from the median line of the ascending channel (shown in blue). Then, justifying the forecasts of MS analysts, the price may reach the upper limit of the channel this month. Also worth paying attention to: → increasing local minima A, B, C show signs of demand strength; → RSI indicates non-divergence, increasing the likelihood of a movement to the lower border of the channel. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
FXOPEN:ESX50
by FXOpen
Equities climbed slightlyEquities climbed slightly at the start of a new week in Europe despite a bullish trend losing direction ahead of this week’s CPI data. Investors and analysts are bracing for crucial inflation prints from the US, EU and the UK this week, with the desperate need to clarify where monetary policies will likely go in these regions, especially after the mixed signals sent by Fed officials over the past ten days. Lower-than-expected inflation rates would highlight the fact monetary tightening from the Fed, the ECB and the BoE has worked efficiently and that a dovish switch could be around the corner, supporting investors’ appetite for risk and driving stock markets to new highs. Higher than anticipated inflation numbers would have the opposite effect, suggesting rates are not yet at a level restrictive enough and that more hikes may be coming, dramatically affecting the price action towards equities. A number inside the previous vs anticipated data window could preserve the status quo and the current slow bullish stance on most markets, making investors wait for the next central bank meetings before driving stocks higher in a much sharper fashion. The STOXX-50 trades around the 4,225.0pts mark, currently higher in all sectors, with healthcare and financial shares as the top movers. Despite a bullish trend slowdown registered by the bearish divergence with the RSI indicator, the market remains well-oriented, still trading its mid-term bullish channel. Pierre Veyret – Technical analyst, ActivTrades
ACTIVTRADES:EURO50Long
by ActivTrades