Is this the rise before the fall that will mirror Thursday’s trading on European bourses?
The first quarter of 2015 is over and most equities ended the period on a negative note; however Wednesday is another day, another quarter, and stocks rallied across European indices as the impact of EU quantitative easing starts to kick in.
Positive data from Germany on Tuesday regarding unemployment did much to alleviate the losses of the previous day on the Germany30 [DAX] and French40 [CAC]. The Change in German unemployment for March measured -15K, versus -12K and previous -20K, with the unemployment rate at a record low of 6.4% versus forecast of 6.5% and previous 6.5%. Likewise European CPI was positive for the single currency region with Eurostat announcing the annual rate of inflation measured through Core Consumer Price Index for Europe at -0.1%, up from -0.3% in February but equal to expectations.
In the first hours of trading on Wednesday Germany30 [DAX] rose 1.2%, whilst the Europe50 rose 1.02% and the French40 [CAC] climbed 1.1%.
The European Central Bank quantitative easing programme has made cash for companies easier to access through the process of banks selling bonds, gaining liquidity, and lending at better rates. This has allowed European firms to start flourishing with new injections of funds with many becoming ‘outperformers’ according to analysts.
Other data from Germany, the strongest fiscal state in Europe as present, demonstrated QE in ‘working progress’. The monthly February figure for retail sales in Germany recorded above expectations at -0.5%, versus -0.7% and previous 2.3%, however, year on year for February the data was below at 3.6%, versus forecast of 3.7% and previous of 5.0% comparable to the same period in 2014.
With devaluation of the euro especially against the U.S dollar, European companies are in a good position to make positive gains, and though European bourses have witnessed volatility, it is the Germany 30 that has shone this year with record highs of 12242 seen in March this year.
MT4 chart: Germany30 [DAX]
MT4 chart: Europe50
MT4 chart: French40 [CAC]
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