European shares close and market wrap: Tracked the global-relief in Asia on Sino/US ceasefire hysteria
|European markets got off to a good start on Monday and sharply higher on Monday, following the global-relief in Asia rally after the U.S. and China trade negotiating teams had warm talks on Saturday night over dinner in Argentina's G20 summit where they manage to agree to take steps to ease trade tensions. We saw the Stoxx Europe 600 index jump 1.9% to 364.23, with the highest proportion of those gains coming from Germany where the DAX rallied over 2.6% to 11,547.07. The FTSE 100 index added up 2% to 7,116.97 while Frances CAC 40 index climbed close to 2% to 5,104.70.
Washington and Beijing have now agreed to postpone the proposed increases of further tariffs on China in a reciprocal deal where China have pledged to buy more U.S. products - This sent shares in trade-sensitive sectors, such as autos and resources stocks that saw the most significant gains, higher. The main benefactors early in the day were with Volkswagen AG rallying 4% and Rio Tinto PLC jumping nearly 5%. Oil majors were also contributing to European indexes as the price of crude oil rallied almost 5% in early European markets sending BP PLC 2% higher.
However, during the day, we had a median reversion effect in the indexes as the hysteria died down somewhat leaving the provisional and come 'confirmed' closing levels as follows:
- Stoxx Europe 600 index to close at 360.40
- German DAX, +1.9% higher - 'Confirmed' 1.85% higher
- France's CAC, +1.1% higher
- UK's FTSE, +1.4% higher - 'Confirmed' 1.18% higher
And as for oil, WTI is up around 2.5% at $52.56 at the time of writing.
DAX technical analyses:
From a technical perspective, the DAX remains bullish-neutral although that break above the 21-D SMA, in the absence of any further mean reversion to close the bullish gap, bulls can target the 50-D SMA and confluence of the 23.6% Fibo target at 11617. RSI was capped at 70 on the 4-hr time frame while daily turns higher. Should price close the gap, as is often the case, the 21-D SMA will need to give way at 11369 first. Deeper territory below 11207 as the recent lows would open up the 11007 level as the 19th Nov low. 10860 comes as the 2016 Aug-Nov level as the critical downside target.
Support levels: 11238 11159 11111.
Resistance levels: 11365 11413 11492
FTSE technical analyses:
From a technical perspective, the index has breached the 23.6% target at 7091 and pierced the 50-D SMA at 7127, scoring a high of 7146.93 - This leaves the price above the descending resistance line as the index moves sideways out of the channel formed between the September swing low and high building the starting points for descending support and resistance. Bulls can pursue the upside so long as the 21-D SMA that guards the gap holds; this is located at 7045 and price closes at 7062. The important next upside target is the 38.2% Fibo of 2018's range at 7244.
Support levels: 6962 6919 6879
Resistance levels: 7046 7086 7130
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