Shares are trading higher in Europe on Thursday despite a shy market open and modest rises overnight by most Asian stocks. The appetite towards riskier assets seems to be back on track on what’s set to be a busy day before the Easter weekend. Even if uncertainty remains on the timeframe for economies to re-open and on how hard it will be for them to recover, investors seem to be willing to extend this week’s rally with fresh highs likely today. Volatility is also likely to be on the rise today as many market participants will be cautiously monitoring a batch of important data releases coming from both Europe and the US.
The Stoxx-50 Index is approaching strong technical resistance levels and the fact that the current short-term bullish trend is slowing down as the market nears these levels is a cause for concern. Although markets may still initially climb higher, the temptation for investors will be to take their profits and reduce their exposure to risk markets, as long as there doesn’t seem to be any significant improvements in the struggle against the pandemic.
Currently, the market is being pushed by financial and discretionary consumer shares with companies like BNP Paribas, ING, Adidas and Daimler among the largest movers. The DAX-30 of Frankfurt is the best performer in the eurozone with the market trading close to 10,600pts. Technically, the market has opened the way for an extended rally towards the gap between 11,000pts and11,540pts zone after the prices cleared its last Speedline. However, the MACD indicator also shows a trend slowdown with a bearish divergence and this should be taken seriously as the DAX, like the Stoxx-50, is also approaching strong technical levels.
