Jerome Powell's speech in Jackson Hole on Friday sparked euphoria in the indices. On Monday morning, European indices begin with a correction of these gains. DE40 drops by 0.36% at the opening, EU50 down by 0.45%.
Macroeconomic data:
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The IFO "Business Climate" index showed a significant increase, exceeding expectations. It currently indicates 89 compared to the expected 88.6 and 87 in previous expectations. This marks the largest increase in 2 years. An even greater rise is noted in the expectations index, which increased from 90.8 in June to 91.6 points in August. Despite many concerns, the European economy is gaining momentum.
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Christine Lagarde, in her latest statement, claims that the European labor market has handled the shock very well and suggests that the worst is over.
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Moody's downgrades Austria's credit rating amid concerns about the growing budget deficit.
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The options market increasingly favors the euro's valuation against the dollar. Europe has ended the cycle of interest rate cuts without drastic economic slowdown or deterioration in the labor market. Meanwhile, pressure on the FED to accelerate and deepen its rate cut cycle is growing stronger.
DE40 (D1):
The technical situation of the index is quite tense. On the 1-day interval, the price is at a crucial moment. The area around 24,320 is the lower boundary of the upward channel. Additional support for this trend is the nearby EMA 50 average. If the current upward trend fails to hold, it will likely face consolidation within the ranges of 23,500 to 24,650. Further declines may be protected by another support zone between 23,500 and 23,000, defined by local lows and additionally reinforced by the EMA 100 average.
Source: Xstation5
Company news:
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Leaders of European stock market gains start the week with declines. Valneva (VLA.FR), a French vaccine manufacturer, lost the license for one of its products in the USA, resulting in a loss of over 20% and erasing all gains from the previous week.
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Ørsted (ORSTED.DK) loses 15% due to a conflict with the presidential administration regarding the construction of wind turbines near Rhode Island.
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The worsening sentiment towards renewable energy causes a nearly 4% drop in shares of wind turbine manufacturer - Vestas(VWS.DK).
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