European markets continued to experience bearish price action in both forex and equity markets as investor sentiment was weighed down by broad based risk adverse trading activity and political/economic woes. Following dovish comments from ECB President Mario Draghi that European economy is slowing down, Euro area macro data came out highly dovish which further fuelled growth worries among investors. While German macro data saw positive outcome, the growth rate was slowest in last 5 years. The week started on cautious note, but bears have started dominating price action in equities near the close of week. Frankfurt stock exchange saw all its three major indices close lower at end of session yesterday.
Positive Trade Talk Headlines Boost Risk Appetite In Broad Market
Out of 778 stocks trading in Frankfurt stock exchange, 361 stocks closed in red 93 stocks closed unchanged at the close of trading session yesterday. Loss from technology and basic material stocks played a major part in influencing bearish price action in DAX yesterday. At the close in Germany yesterday DAX, MDAX and TECDAX indices were down by 0.12%, 0.20% & 0.12% respectively. Bearish sentiment in European markets were further intensified on survey result from Reuters which stated that economists believe ECB’s expected rate hike in Q3 2019 could be moved to Q4 2019 as macro data hints at slowdown in Euro area economic activity and growth outlook for major markets such as Germany, France, and Italy were lowered resulting in dovish investor sentiment.
However, market sentiment improved in Asian market hours as equities gained from Wall Street cues and headlines from US which stated US officials are considering reversing tariff on Chinese import goods in a bid to reduce the impact of trade war on US economy and hopefully close a trade deal with China. While Forex market failed to gain strength on said news, risk appetite in the broad market remains high and equity market is expected to trade positive on last trading session of the week. DAX Futures trading in the international market were up by 1% ahead of Frankfurt market opening which combined with the improved risk-on trading environment is expected to help German equities trade positive across the day. DAX index is likely to trade positive across the day and hit new monthly high’s before trading session closes for the day.
This article was originally posted on FX Empire
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