Technical Analyst, Saxo Bank
Summary: European Equities trying to rebound from last week's sell off. The negative mood can quickly return putting pressure on support levels. Expect continued volatility.
GER40 experienced very volatile trading last week in a broad range between support at around 14,827 and resistance at the 200 SMA and 0,618 Fibonacci retracement at 15,610. 15,610 could prove too strong to penetrate. However, do expect buyers to try the coming week. If they succeed there is resistance around 15,722.
If this is a fourth corrective wave we are seeing it must not move above 15,723.
If sellers regain control to take the Index back below 15K a new attempt that the strong support at 14,827 is likely.
OMX C25cap/DEN25 found support around 1,700. Also rebound here should be expected possibly to test the resistance at around 1,800. A close below 1,710 is likely to resume the bear trend.
CAC40/FRA 40 has rebounded from 200 SMA and the support at around 6,730 And back above the rising trend line!. 55 SMA however, could be too strong a resistance to overcome. A break above 7,060 could fuel further upside. Below 6,835 will likely see sellers to regain control with a likely test of both support at around 6,658
AEX25/NETH25 found support at 735 and has since bounced nicely. At the time of writing trading above the resistance above 750. There could be further upside to the 200 SMA around 765 and the 0,618 fibo retracement at 770. If the Index drop back below 750 a new attempt at 735 support could be seen.
SMI/SWISS20 closed below support at around 12,047 only to rebound strongly from 11,750. A rebound that could take it as high as 12,500. However, the sentiment is negative and it could be a struggle to reach those levels. Resistance at around 12,366.
BELG20. Sell off last Monday took the Index straight through the support at 4,045 dipping below 4K. That could have caused further selling panic but instead buyers came back in scooping up beaten down stocks lifting the Index back above. At present the 4,045 levels seems to be the pivot point for the market being either positive or negative. However, a new push below 4,000 could re-fuel the sell off. 4,117 is the price level needed to be taken out for upside potential towards 4,200 area.
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.