The opening of stock markets in Western Europe today is taking place in an atmosphere of heightened caution. Indices such as the UK100 and FRA40 are showing slight increases today, while the German DE40 remains almost unchanged. Such a restrained reaction from investors indicates the market's focus on upcoming decisions and macroeconomic readings.
DE40, the main index of the Frankfurt stock exchange, started today's session in a calm tone, reflecting investors' anticipation of key macroeconomic events. Quotes remain stable, and volatility is limited – the market seems to be in a "pause before decisions" phase. Market participants are primarily focused on communications from the European Central Bank and inflation data publications, which may provide a clearer direction for the German market in the coming hours and days.
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Macroeconomic Data:
At the beginning of the session, movements are quite small. Markets in Europe are holding their breath, waiting for a series of extremely important readings and decisions. Today, this includes:
- The European Central Bank's decision regarding interest rates. The market expects no changes in policy.
- In the USA, the publication of both CPI and the number of unemployment claims — crucial in determining the further direction for the economy and markets.
The European Central Bank's decision is crucial for the markets because it sets the direction for the cost of money in the eurozone. Any change, or even the tone of the communication, directly affects asset valuations and growth prospects. The market expects that the European Central Bank will not make any changes today and will maintain its current monetary policy. Investors assume that interest rates will remain unchanged, and any future guidance will only appear in the communication and statements by Christine Lagarde. This approach means that the key will not be the meeting itself, but its interpretation – the market will analyze the tone of the central bank's statements.
Data from the USA, on the other hand, have a significant impact on European markets because they shape global expectations regarding Federal Reserve policy and thus capital flows. Stronger-than-forecast inflation or labor market readings may prompt the Fed to maintain a more restrictive stance, which usually strengthens the dollar and weakens the euro. For European companies, this means simultaneously more difficult financing conditions and pressure on stock valuations.
Conversely, weaker data from the USA may support sentiment on the Old Continent, as they increase the chances of faster interest rate cuts across the ocean. Such a scenario improves the global appetite for risk, encourages capital inflow into stock markets, and may translate into a positive impulse for European indices, including the DAX.
DE40 (D1)
Source: Xstation
DAX remains in a correction phase and consolidates around a key support area, where the demand zone and the 38.2 FIBO level overlap. Defending this area could open the way for a rebound and a retest of moving averages and higher resistance zones, while a breakout below increases the risk of deepening declines towards the 50 and 61.8 FIBO levels – or in extreme scenarios, even a test of EMA200.
Company News:
Avio (AVIO.IT) — Bloomberg reports that the Italian rocket carrier manufacturer is seeking capital donors to finance investments in infrastructure expansion and research. Investors are disappointed with the company's plans, which significantly increase its debt. The stock price drops by over 10% at the opening.
Buzzi (BZU.IT), Heidelberg (HEI.DE) — Cement suppliers received a positive recommendation from JP Morgan, predicting above-average results for the European sector. The companies' stock prices rise by 8% and 3%, respectively.
Adecco (ADEN.CH) — Jefferies agency raised its recommendation for Adecco, increasing the target price from 18.5 CHF to 24 CHF. The company's shares rise by over 1%.
Airbus (AIR.FR) — The CEO of the aviation company announced that despite delays, order deliveries will be completed on time. The company's shares rise by 2%.
