- European stock markets have started off on the right foot after North Korea’s deterrence
- DAX (DE30 on xStation5) is on track to breach a crucial resistance zone
- Merck (MRK.DE) gains in the morning following the company’s reports
After the hectic beginning of the week, one could notice that investors have already thrown off as they’ve rushed to buy riskier assets once again. As a result, the European equity markets have kicked off the day with quite upbeat moods. What’s more, rises have been already propelled by a brief decrease seen in the euro. It’s worth mentioning that investors have shrugged off the news that North Korea prepares itself for another an ICBM launch before September 9. Even so, it’s worth keeping a close eye on that thread.
There is no doubt that it’s been some kind of buying spree seen in early trading, however we’re still quite a long way off from a resumption of a bull market. The price is testing a critical line being placed at around 12160 points. Should buyers are able to break it out, it would be a strong bullish (technical) sign heralding further gains in oncoming days. Thus, the jury is still out and we have to wait till the end of the day in order to reason out a possible further direction on the DE30.
A close above a downtrend line would also complete a descending sequence which has been the case since June. Moreover, bulls could look for some support from the euro ex-change rate as its decline could be presumably stocks-positive. Taking that into account it’s worth looking at two FED speeches which might potentially prop up further falls on the EURUSD. As it’s taken place so far, a breakout beneath 12075 points might hasten a downward move, although it’s unlikely to be a watershed in terms of a bear market unless North Korea escalates its military activity anew in a more menacing manner.
Looking through the Asian equity markets one could notice that they were quite benign except the Japanese NIKKEI (JAP225) which moved down 0.6%, mainly on the back of another beneficial session seen in the JPY (a negative relationship acted once again). On top of that, the Shanghai Composite (CHNComp) closed higher 0.15%, the Hang Seng Composite (HKComp) gained a mere 0.05% while the Australian S&P/ASX 200 managed to add just 0.07%.
In turn, when it comes to the European bourses, they’ve managed quite well thus far. The DE30 is rising 0.55%, the CAC40 (FRA40) is gaining 0.25%, the EuroStoxx50 (EU50) is edging up 0.3%, whereas the FTSE100 (UK100) is beefing up 0.3%.
In terms of specific stocks Merck (MRK.DE) is especially worth mentioning which is up almost 3%. The stock is in demand in the aftermath of the company’s report as the firm is considering a sale of all or part of its consumer health division amid internal funding constraints.
Besides, Volkswagen (VOW.DE) is gaining a foothold as well which could a consequence of Chancellor Markel’s remarks. She renewed its pledge pertaining to diesel engines saying that it will be needed for decades being a bridge technology to electric vehicles. In a nutshell, Germany seems to be unlikely to ban diesel cars at least as for now.