Benchmarks extended Tuesday’s gains in Europe this morning, alongside US futures, providing investors with a little relief following one of the most bearish week in months for equities.
French and German indices are leading the charge on the continent. The STOXX-50 Index soared to above 3,800 points as bull traders took control of the market above 3,740 points (38.2% Fibonacci), at the least temporarily. Even if yesterday’s bullish price action is being confirmed so far today, investors are likely to remain cautiously optimistic this week. As long as no significant resistance (3,850pts / 3,900pts) gets cleared, the current rebound will remain as a “bullish correction” sparked by short-covering operations before the Christmas holiday, when market liquidity tends to decrease, rather than a clear trend reversal. In addition, the recent instability spotted in bond markets following Japan’s surprise shift in its yield trading band doesn’t offer a supportive environment for risk appetite.
Canadian CPI data, US CB Consumer Confidence and Existing Home Sales may increase market volatility today while energy stock investors will still pay close attention to today’s data as the US…