European markets yesterday saw dovish price action as global growth worries weighed down investor risk appetite significantly. Investor sentiment is highly dovish since the start of the week over cues from the international market and political tensions in key European markets. From UK Brexit, France Yellow Vest Protest to Italy’s Anti-EU power play which aim at bring power of key decision making back to Italy and shifting power of major decision making from Germany and France, European market is embroiled with key issues that are greatly affecting economic activity which has already taken a hit from ongoing global trade war resulting in economic activity slowing down. This is clearly visible from dovish EU ZEW economic conditions and German ZEW current conditions data releases yesterday.
Dovish Macro Data Supported Bearish Price Action in German Market
German market being industrial and trade-dependent in nature suffers greatly owing to political struggle in Europe and dovish investor sentiment. At close in Frankfurt stock exchange, yesterday 437 stocks out of a total of 778 stocks closed in the red. The three most popular indices of the exchange DAX, MDAX and TECDAX closed for bearish for the day with 0.41%, 0.13% & 0.50% decrease in value. High level of declines was visible in stocks from basic resource, food & Beverage sector. Major Asian equity markets resumed bearish price action today as investor sentiment is still dovish owing to global growth worries. However, conflicting headlines from U.S.A which resulted in escalation of tensions between China & U.S last night plays a major role in today’s cautious price action.
Given the fact that major issues are yet to be addressed in talks between two nations and multiple headlines hit market in recent past which hinted at possibility of trade talks between two parties ending on negative note, market is seeing high level of risk-averse trading activity and this sort of price action can be expected across the week as investors will remain cautious ahead of Vice Premier Liu He’s visit to the U.S. next week. DAX futures trading in the international market were down by 0.43% ahead of Frankfurt market opening. Given that German stock market is highly susceptible to cues from international market and investor sentiment in dovish in European market DAX index is expected to continue bearish price action across the day and closed in red for the third consecutive trading session.
This article was originally posted on FX Empire
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