European stock markets moved higher, following on from a rally in Asia overnight. Chinese markets in particular bounced back from yesterday’s slump as trade jitters abated somewhat after Chinese and US officials reportedly flagged the prospect of returning to talks, with China’s Vice Minister of Commerce calling for bilateral negotiations to resolve the conflict.
In Europe, the UK100 led the rebound in stocks with a gain of 0.78%, as Gilts outperformed and yields eased slightly. The GER30 also managed a rise of 0.61%, helped by a strong Eurozone production number and easing trade jitters. Eurozone industrial production rose 1.3% m/m in May, after contracting -0.8% m/m in the previous month, fueling hope of a rebound in GDP growth in the 2nd quarter.
The German benchmark (GER30) is trading close to yesterday’s open at 12,490.00. This could provide some Resistance to the index, and we might see a swing back lower at the confluence of week’s low, the 23.6% Fibonacci retracement level from the decline identified since June 15, and the FE 61.8 from June 19 rebound. This strong Support area is set at within 12,360.00-12,380.00. A break below this Support could turn the focus towards 12,100.00 barrier.
Oppositevely, a break above 12,500.00, which is the 38.2% Fib. level could suggest that index is likely to fill the gap to the upside and hence to retest July’s peak at 12,640.70.
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