DE30: Stocks drive higher as trade anxiety eases

Summary:

• Stocks across Europe begin Wednesday’s trading clearly higher as trade angst settles down
• DAX (DE30) sees a pullback from its key technical level
• OPEC leaks may influence oil prices setting moods among equity investors

Stock prices in Europe have rebounded notably in the morning following heavy losses witnessed yesterday after US President Donald Trump flagged up the US stood ready to slap China with new tariffs if the country retaliated. The most impressive gains are observed in South Europe where both Italian and Spanish markets are seeing healthy gains climbing 0.8% and 0.9% respectively as of 8:46 am BST. Having said that, it’s clear that the jury is still out, and no one should be certain that trade frictions have settled down once and for all. It’s more probable that both countries have decided to think through their recent steps, but a baton has been passed to China (after Trump ordered to prepare a list of more Chinese goods on which new levies might be put) hence another move, if anything, might come from there.

The DE30 has respected a demand zone nearby 12550 points, bulls may hope for a bounce. Source: xStation5

A technical landscape has not changed too much recently, nevertheless the price has managed to stay above 12550 points offering some hope for buyers to see a recovery. The yesterday’s candlestick might be promising for them as it was drawn in the vicinity of a critical technical area being underpinned by a 23.6% retracement. However, before we see any larger increases the German index needs to close a bearish gap (it has yet to be done despite decent rises in the morning), hence a daily close above 12760 points would result in subsequent gains in the nearest future.

Increases are quite broad-based, but they look rather contained. Source: xStation5

The OPEC+ meeting is by far the most important event for this week as it could shake oil prices quite substantially and thereby influence equities all around the world. So far we’ve been offered some comments suggesting that an output pick-up theme is likely to be brought up, but talks have yet to be made according to Reuters citing two sources familiar with the matter. In turn, Iranian oil minister reiterated his pledge the country has no plans to back up a production increase during the meeting (Venezuela shares this view as well). While Oman’s oil minister claims that a chance to get a consensus during the Friday’s meeting is quite high, there is no doubt that it won’t be in the spotlight at all as everybody zooms in on whether the cartel opts for a rise in production or not - this should really matter for prices at the end of the day. Let us notice that Saudi Arabia, the most important OPEC’s member, together with Russia are expected to endorse an out-turn increase but both countries may differ in terms of an amount. While Russia keeps pushing for a 1.5 million barrels pick-up, earlier reports published this weeks pointed to a rise between 300kbpd and 600kbpd, and it looks that the former is much more feasible option given that there is no consensus in terms of any production increase.

Meanwhile, the DE30 is gaining 0.3%, the French CAC40 (FRA40) is rising 0.1%, the EuroStoxx50 (EU50) is adding 0.5% while the British FTSE100 (UK100) along with the Spanish IBEX (SPA35) are going up by over 1% each.