Technical Analyst, Saxo Bank Group
A relief rally across all European markets is pushing Indices above resistance levels. The good mood might last a couple of more days but the overall trend is still down and the selling pressure could very well resume shortly. Gaps created this morning and fast approaching resistance levels are to watch out for.
CAC40 jumped this morning back above the resistance at 6,421 fast approaching the 0.618 Fibonacci retracement at around 6,630. A move higher to test the 0.764 retracement and the neckline from the Shoulder-Head-Shoulder pattern is not unlikely. 200 daily SMA around 6,750 will offer some resistance.
If CAC 40 closes the gap from this morning i.e. dropping below 6,355 bear trend will likely resume.
AEX Amsterdam gapping higher and is currently testing 0.382 retracement and resistance at around 700. Next resistance is at around 714. However, AEX could jump as high as to around 726 which is a big consolidation level. If AEX closes gap from this morning selling pressure could be fueled taking the Index to test lows at 652.
BEL20 has experience a strong rebound. Stronger than other markets. Fast approaching resistance level at around 4,095 which might be too strong to penetrate. If BEL20 over the next 4-6 trading days closes the gap from this morning bear trend will likely resume.
SMI 20 is back above Bear/Bull pivot level at 11,878 and is likely to move to test 0.764 retracement at 12,069 but could spike to test 200 daily SMA before selling pressure will likely return. If the SMI Index over the next 4-6 days closes the gap created this morning selling pressure is to return.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
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