- European indices gain after French Exit Poll results
- Moving forward, attention will focus on CPI data from Germany and ISM PMI from the US
- Banking sector leads gains on the Old Continent
Overall market situation:
The first trading session in Europe this week brings gains in the quotations of major stock indices. The key factor creating volatility today is the reactions to the Exit Poll data of the French parliamentary election results. Germany's DAX is currently gaining 0.4%, France's CAC40 is up 1.56%, and the UK's FTSE 100 is up over 0.45%. Later in the day, investors' attention will turn to the CPI data for Germany and the ISM PMI data for US manufacturing.
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Volatility currently observed in the DAX index. Source: Bloomberg Financial LP
Volatility currently observed in the broad European market. Source: xStation
Germany's benchmark DE40 is up nearly 0.3% during today's session. The index continues to hold the structure of the downtrend initiated on May 16. The continuation of the downtrend led to the testing of a historically important support level in the zone of the 100-day exponential moving average (purple curve on the chart, all the time it remains a key support point). Locally, the most important resistance all the time remains the zone of the 50-day exponential moving average (blue curve). The DE40 index has currently broken out above this zone, nevertheless the situation still does not seem overly certain, as much of the morning's gains have already been erased. Source: xStation
Interestingly, the test of the zones of the previously mentioned 100-day EMA brought a clear activation on the volume side. This may indicate that we have seen a lot of institutional investor activation in this zone. Source: xStation 5
News:
On the corporate side, investors' attention turns to the French market today. The preliminary results of the parliamentary elections have brought a thaw to the CAC40 index companies, which were heavily oversold just a week ago.
The banking sector is leading the increases seen today on European exchanges. French banks are doing particularly well in this aspect. Source: xStation
A large part of the increases seen on FRA40 are the result of covering short positions, which as recently as last week were being taken en masse to hedge their exposure ahead of the elections. Source: Bloomberg Financial LP
The European banking sector, as represented by the Euro STOXX Banks index, is currently trading near -1 standard deviation of the estimated PE multiplier trading range from the beginning of 2020. Source: Bloomberg Financial LP
In Germany itself, slightly weaker sentiment is being seen in the stocks of technology companies, due to a pre-market sell-off in Nvidia (NVDA.US) shares.
Other news coming out of individual companies in the DAX index. Source: Bloomberg Financial LP
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