Europe begins recovering the Black Monday

8月6日

In Asian markets, Japan's Nikkei is up 10% this morning after a historic drop, while Wall Street futures also show stability. San Francisco Fed President Mary Daly calms recession fears, boosting confidence in the direction of inflation. However, investors are cautious, waiting for more signals from central banks.

The European STOXX 600 index is up 0.4% this morning, recovering after hitting six-month lows with a -9.28% drop in just two trading days equivalent to 457.25 European index points. This rise is due to the global recovery and positive corporate earnings updates. Euro STOXX volatility decreases after reaching its highest level since March 2022.

Technology and banking stocks lead the gains, with Monte dei Paschi di Siena up 8.4% and Adecco up 5% despite hiring warnings. Zalando and Abrdn also report significant increases in earnings and operating profits.

We already saw on the 23rd an inverted hammer that precipitated on Friday and Monday with a highly unexpected index correction in Europe, but that could be glimpsed due to the exhaustion of the market in general, and the RSI marked the change of direction to sell. At the moment we have the RSI oversold at 28.87% so it would not be unusual in conjunction with the shape of the current figures, that the price recovers to the channel generated on volumes set around the bell. The current average trading zone is located around 4,972 points, so if the European market shows strength in trade balance and industrial production indexes such as the German one, which are key for the Euro zone, we will see a strengthened EuroStoxx 50 resurging from the current price zone and trying to recover the lost gains of the whole year in just two days. In absolute terms, the index has fallen almost -13% since March.

Ion Jauregui – ActivTrades Analyst




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