Stocks rose in Europe on Tuesday, following a mixed trading session in Asia despite reassuring data from China overnight. Stock markets around the world have extended their very-short-term rally with investors’ appetite towards risky assets revived amid signs of stabilization in the number of coronavirus cases in some of the worst affected countries in Europe. Italy reported its lowest number of daily new cases in weeks while the data also seems to be trending lower in Germany as well as in Spain. However, even if the current rally limits losses as we head into Q2, the outlook remains bearish for Europe. First, it is far from certain that the bottom of the market is definitely behind us. Secondly, even if it is, investors around the world are highly likely to soon start pricing in the negative impacts of such massive monetary adjustments from central banks. This situation is especially true in Europe where the ECB is likely to get out of the crisis with record levels of debt, which will certainly impact on the robustness of the EU bloc.
The Stoxx-50 Index is trading higher today, above 2800pts, led by travel and leisure shares. The German DAX-30 Index is today’s best performer with the market challenging the upper band of its consolidation zone, a clearing of which could drive prices higher still towards 10,200pts and 10,435pts by extension. Both the MACD indicator and the 55-day moving average are giving bullish signals, however, another failure to break through the ceiling at 10,065pts could lead prices down to support levels at first 9,970pts and then 9,815pts.
