European markets yesterday saw all its major indices and key stocks close in the red. This downside action was a result of investors turning cautious ahead of key political events that are set to occur this week. European market has been trapped inside bearish playground for quite some time now as local factors such as political power struggle, economic slowdown owing to local unstable government and public protests etc., Further cues from major geopolitical events such as Sino-U.S. trade talks, the U.S. targeted attempts at forcing E.U negotiators into accepting U.S. terms and Brexit also affect price action resulting in a chaotic environment in the European market. While equity markets continue to trade in red, the forex market has displayed mixed price action as investors risk appetite seems to be divided in major markets despite visibility high level of caution ahead of major global events.
Cautious Investor Sentiment Still Prevalent In German Market
This week is set to see UK parliament vote on PM May’s Plan B today, Sino-U.S. high-level representatives are expected to meet in U.S. and are expected to address key issues which have been left untouched and unresolved till data, US FOMC interest rate decision update all of which inspired caution among global investors. This resulted in equity markets taking dovish nose dive with German equities suffering significant losses. At close in Frankfurt stock exchange, out of total 778 stocks, 465 closed in the red. As per E.O.D report from the exchange on the performance of sectoral indices, stocks which suffered high losses are from Basic resources, Retail & Pharmaceuticals/healthcare sectors. All three most-watched indices of the exchange closed in red with DAX, MDAX & TECDAX down by 0.63%, 1% & 0.98% on the day. Moving forward Frankfurt market is expected to see downward price action today on cues from the international market.
US Wall Street collapsed last night on profit warnings from Nvidia, Caterpillar and Whirlpool owing to low demand from China – their major import market. Further, cues from Wall Street and concerns of low demand from China owing to the influence of ongoing Sino-U.S. trade wars further weighed down Asian stocks. The German market is highly susceptible to cues from the international market which is currently dovish as Luxury products, Auto market and Technology make up most of the German industry and they are all exposed to ongoing global trade conflicts. DAX futures trading in the international market saw two war action as it was both up by 0.25% & down nearly 0.40% ahead of Frankfurt market opening today. This combined with cues from international market suggests that DAX is likely to trade range bound with bearish bias during today’s market hours.
This article was originally posted on FX Empire
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