European stock markets broadly higher
|GER30, H4
Today, Germany’s Schaeuble calls on parties to compromise in the search to find allies for Chancellor Merkel. The new head of Germany’s parliament and former Finance Minister added his voice to that of German President Steinmeier, who also called yesterday on parties to try again to find a solution to the impasse that leaves Merkel with only the option of a minority government or new elections. Merkel already said that she would prefer the second option, but the there are fears that this would only strengthen the far right AfD and furthermore, that it would also leave Germany unable to make decisions on a European level for a prolonged period.
Political instability in Germany, furthermore comes at a time when Europe should be focusing on Brexit and structural reforms, as well as reforms to the political structure of the EU. Today, European stock markets are broadly higher as sentiment improves following a sluggish start. It seems that the solid economic fundamental and robust earnings reports won out politics. U.S. stock futures are also moving higher ahead of the Thursday holiday and for now markets are shrugging off political uncertainty.
Meanhwhile EGB yields are broadly down but have started to come up from lows, as stock markets shrug off early jitters and move higher, led by a 0.43% rise in the GER30, which continues to ignore political wobbles that are feared to send Germany on the road to snap elections and put Merkel’s future as Chancellor in question.
The GER30 after rejecting today the 50-Day MA, it currently testing the 20-day moving average after breaking above the 23.6% Fibonacci retracement level of the rise from 11867 to 13538. Today’s break above last week’s high, and above the 13145.00 (23.6 Fibonacci retracement), indicates that downside pressure has been weaken and the buying momentum still. holds despite politics. Hence a daily closing today above the 23.6% could suggest further upside momentum with scope up to 13255.00 and 13388.00.
However an entry was already taken on 13145.00 with Support at 12983.00 and Targets at October’s peak (13255.00) and at 13388.00.
Nevertheless, Daily Momentum indicators are mixed with RSI being neutral, while Stochastic rejected oversold territory and slope quite weak above 30. The MACD lines meanwhile remain positive, however fast line weakens.
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