- All major European stock markets have begun the day broadly higher with the DAX (DE30 on xStation5) settling in at its new all-time peak
- DE30 blasts its local resistance and sky is the limit when it comes to how far we can go
- Linde (LIN.DE) leads the gains as Commerzbank says Q3 results could be revised upward
The ECB meeting is already done and one may conclude that Draghi did his job as he was able to take the single currency down. At the same time the German stock market got a boost after markets reconsidered the ECB materials once again suggesting that expansionary policy was basically left in place (QE is going to persist, the proceeds from maturing bonds are to be reinvested while a deposit rate is still anchored below zero).
The economic backdrop of the European economy remains buoyant while financing conditions are going to be loose which seems to be an excellent mixture for equities. Consequently, the German DE30 blasted its key technical resistance late afternoon which could help open further space for gains. Let us remind that we underlined several times that 13200 points was a key level which bulls would be aiming for. Today we may say that this move was already accomplished which nevertheless doesn’t mean that further gains are unlikely.
Taking a closer eye on the chart above one could see that we’ve painted another target for bulls nearby 13370 points as this level is underpinned by a 138.2% retracement of a leg lower which occurred earlier this year. Notice that the index has been able to stay above a crucial support area at around 12900 points which might be considered as the nearest line of defence for bulls. At last, the poorer euro performance could also act in favor of the stock market. What’s more when we take a look at the interest rate market, massive space for declines on the EURUSD may be spotted, the future scenario might be conditional on today’s GDP release from the US though.
Summing up the Asian session one could conclude that moods were relatively upbeat, this is especially true when it comes to the NIKKEI (JAP225) and the Hang Seng (HKComp) which gained 1.25% and 1.5% respectively. Otherwise, the Shanghai Composite (CHNComp) climbed 0.3% while the Australian S&P/ASX 200 (AUS200) trimmed 0.2% as the Supreme Court ruled that Deputy Prime Minister Barnaby Joyce and four more lawmakers are ineligible to remain in parliament which means that the parliament loses its one-seat majority.
The European equity markets have beamed with optimism thus far following Thursday’s session. In effect, the DE30 is gaining 0.65%, the CAC40 (FRA40) is heading higher 0.55%, the EuroStoxx50 (EU50) is rising 0.6% while the FTSE100 (UK100) is adding 0.3%. On the other hand, the Spanish IBEX (SPA35) is trading slightly higher after separatists have pushed Carles Puigdemont to the wall demanding to continue independence push.
Linde (LIN.DE) is leading the gains along with Volkswagen (VOW.DE) within the DE30 which could be a ramification of a note coming from Commerzbank. The German bank wrote that Linde’s good Q3 results with encouraging acceleration of comparable growth may trigger some upward revisions from bottom-end consensus.
In turn the German carmaker Volkswagen is rising on the back a report that the firm’s 2017 operating margin is going slightly exceed its estimated range by 6-7% as the Q3 results beat the highest analyst estimate.