European indices and EUR jump at the start of a new week
Global equity markets finished last week's trading in risk-on moods and upbeat sentiment can also be spotted at the beginning of new week's trading. Major stock market indices from the Old Continent are trading over 1% higher. German DAX (DE30) is one of top performers with a 1.5% gain at press time. An improvement in moods is accompanied by weakening of the US dollar and a drop in US yields. Meanwhile, EUR jumped to a 4-week high against US dollar on the back of hawkish comments from ECB members over the week.
It is hard to pinpoint a reason that drives today's rebound. However, a look at sectors in the Euro Stoxx 600 index offers a hint. Today's rally is fuelled by solid performance of cyclical stocks - retailers, miners, carmakers, builders and banks. As such one may say that concerns over the condition of the global economy are easing, providing a lift for stocks. However, this upbeat narrative will be put to a test later this week with releases of 2 crucial pieces of data from the United States - CPI inflation on Tuesday, 1:30 pm BST and retail sales on Thursday, 1:30 pm BST. They will not only highlight how the US economy performs but may also offer hints on the path Fed will take at the coming meetings.
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Cyclical stocks drive today's rally in Euro Stoxx 600 index. Source: Bloomberg
DE30 trades 1.5% higher today. Index reached 13,330 pts resistance but the first attempt of breaking above was a failed one. Source: xStation5
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