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In general, European indices surged to begin the new business week. In a nod to last week’s bidding fervor, risk appetite is driving stocks higher. Investors suffering from FOMO are prioritizing stocks above data threats.
Monday saw gains in all of the European equity indexes as traders piled into the market ahead of a plethora of European data events scheduled for the middle of the week, including the euro area Purchasing Managers’ Indexes (PMI) and an interest rate call from the European Central Bank.
Even if there was a sharp decline a week earlier, European shares are continuing to rise as US Treasury rates are beginning to ease back, extending the risk appetite that was seen in late last week. On Monday, the yield on the US Treasury’s 20-year note dropped below 4.4% once more, reaching a low of 4.366%, which encouraged investors to return to equities.
Markets will be shifting their attention to focus on the European Central Bank’s upcoming rate call on Thursday as a wave of European data is scheduled for the mid-week hump this week. The euro area PMIs are generally expected to show slight but determined upticks.
All indications point to the ECB keeping rates in place through at least the summer, as market expectations of a first-quarter rate drop were prematurely crushed by persistently high inflation and erratic economic data across the European Union.
ECB President Christine Lagarde warned last week that aggressive market bets on swift and early rate cuts are clouding the outlook, making the ECB’s job more difficult, and running the risk of further harming the European economy. ECB policymakers have been working nonstop to try and deflate market expectations of rapid and deep rate cuts from the ECB in 2024.
On Monday, the major European equity index STOXX600 gained 3.62 points, closing at €472.86, up 0.77%, while the French CAC gained 0.56%, closing at €7,413.25, up 41.61 points. In addition, the FTSE index in London increased by 25.78 points, or 0.35%, to close on Monday at £7,487.71, up 35.87 points.
On Monday, the German DAX also saw growth of 0.77%, gaining 128.33 points to close at €16,683.36. Technically, the German Dax continued to rise on Monday, breaking out of its previous downward trend. From December’s top around €16,984.00, the German index dropped from peak to trough by about 4%, and bidders will be vying to retake control of the DAX.
The 50-day Simple Moving Average (SMA) is still providing technical support for the major index, with pricing in a floor somewhat above €15,800 providing long-term technical support. The SMA is currently located near €16,400.00.
