The European stock markets opened higher today despite some uncertainties regarding the Super Thursday. Investors had a really volatile day yesterday as rumors concerning potential changes in ECB’s inflation forecasts turned the EURUSD upside down.
The CAC40 (FRA40 on xStation5) gains 0.2%, the FTSE100 (UK100) hovers around break even, the Eurostoxx50 (EU50) is up by 0.27% and the German DAX picks up by 0.3% in Thursday’s morning trading. In Asia there were vague moods as the NIKKEI (JAP225) lost 0.38% on the JPY’s rebound following disappointing GDP figures for Q1. In turn, the yen is gaining momentum as the Comey’s testimony calls Trump’s reforms into question. His appearance will take place later in the day and could have an impact on DE30 via American markets. Elsewhere, the Australian S&P/ASX200 closed up by 0.17% as the Australian trade balance showed a surplus in April, falling short of expectations though.The German DAX rises in early European trading despite risks surrounding the ECB’s meeting and the Comey’s testimony. Source: Bloomberg
Cutting to the chase we can state that almost all sectors are on the green side today. The only ones being below the unchanged are real estate, consumer discretionary and telecommunication services. However, to be honest, there are no relevant declines. The best performing sector is the utilities (up by 1.3%) following yesterday’s reports on RWE (RWE.DE) and EON (EOAN.DE) which substantially buoyed these stocks.
While RWE is gaining just modestly (up by 0.23%) EON is marking subsequent hopeful day picking up by 1.7%. It’s worth mentioning Thyssenkrupp (TKA.DE) is showing a robust gain by 2.77% as the company received a relevant TWIN’s order from China. The TWIN is the first elevator system with two independent cars in one shaft. It was ordered by the Sunshine Insurance Group, the Chinese leading insurance company as it builds its new headquarters in Beijing.
The DAX seems to be poised to resume its uptrend as bulls managed to defend the key support zone. Source: xStation5
Let’s take a look at the chart above. From a short-term point of view it looks like the index is already poised to resume its uptrend. The DAX tested the key support zone twice and rebounded subsequently. Hence, one could expect that the index will be going towards its all-time high located around 12850 pts.
While short-term prospects look encouragingly, the DAX could look overvalued when we factor in fundamental metrics like the P/E ratio. It could be seen at the chart below that current prices exceed levels indicated by the ratio quite substantially.
Caution could be needed in the longer-term as the DAX could to be overvalued when the P/E ratio is considered. Source: Bloomberg