European markets on Friday saw sharp declines on all its major indices and stocks owing to the high level of bearish sentiment in the broad market. Disappointing macro data outcome from Germany and the European central bank’s reduction of growth forecast for 2019 revived concerns of a slowdown in European economic activity. This caused German 10-year government bond yields to decline and led to a widening of spread difference between major global counterparts such as Italian and American 10-year government bond yields leading to market fundamentals taking a dovish turn and influencing bearish investor sentiment.
Dovish Momentum From Friday Is Likely To Inspire Dovish Price Action
This caused both EURO and major stocks/indices in all European markets to take a bearish nosedive during Friday’s market hours. German equity market on Friday closed with a sharp decline owing to prevalent risk-averse trading activity. Out of total 778 stocks trading in the exchange, 513 stocks closed in red while 84 closed unchanged at end of trading session. As per data on the performance of sectoral indices from Frankfurt stock exchange, stocks from Automobile, basic resources, and technology sector saw most declines with all sectoral indices closing in red for the week. All three major indices from Frankfurt exchange closed in red with DAX, MDAX & TECDAX down by 1.05%, 1.21% & 2.07% on the day.
Asian markets today opened on a dovish note with all major indices and stock trading in red on dovish cues from US Wall Street. Further, weekend headlines from the US indicated that Sino-U.S. trade talks are set to resume later this week, which caused tensions surrounding trade talks to remain high as the deadline is nearing by with no signs of a trade deal between the two nations. Given investors concerns of an economic slowdown in the Euro area and declining Treasury Yields, the European market is likely to see dovish investor sentiment. However, DAX futures trading in the international market were positive ahead of the European market opening. Mixed cues from the international market suggest DAX is likely to trade range bound during today’s market hours with directional cues likely to be inspired by headlines driven momentum.
This article was originally posted on FX Empire
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