Yesterday, the European Central Bank (ECB) affirmed that its QE program will stop this year. Will this accelerate the price declines of European stocks?
For the German DAX Index, its technical outlook remains poor. The equity index has completed a toppy reversal pattern two months ago and has been trending lower ever since (see below). At this rate of decline, it may sink towards the major round number level at 10,000.
For the French CAC Index, it too is displaying a long-term toppy chart. Prices broke the 5,000 key psychological support just recently. That level may now be a technical resistance (see below). Its near-term downside is at 4,600.
View: Stock markets around the world started 2018 on a very strong note. But the correction in February damaged investor confidence somewhat. This is then followed by trade war fears, a rise in energy prices and interest rates, and a general slowdown in economic activities. Many companies reported profit warnings lately.
Therefore, I presume the current subdue stock trends are likely to continue in Europe, especially now that the ECB has removed the QE stimulus.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.