European Equity Analysis and News
See our Q3 forecasts to learn what will drive Major Assets through the quarter.
Trump Trade War Rhetoric May Spark Fresh Selling
European equities may feel the bite from an increase in trade war rhetoric from President Trump after yesterday’s trade data. Despite the US imposing tariffs on China and the EU, the US trade deficit increased to a 5-month high with a record goods deficit against China and the EU. The deficit with the EU rose to $17.5bln with exports plunging some 15%, while imports rose 2.5%. As such, given the efforts by President Trump to narrow the deficit, the latest statistics could prompt another threat from the President, which may lead to the imposition of additional tariffs against the EU, placing European equities under more pressure.
Elsewhere, the consultation period to impose further tariffs on China will be finalized today, which in turn paves the way for a decision. However, what is not clear is how quickly fresh tariffs will be imposed.
Euro Stoxx 50
The Euro Stoxx 50 continues its bearish trend amid the series of lower since the middle of the year. The break below the June lows at 3329 opens the index up for further losses. However, the 3290-3300 support could curb additional weakness for now, while a break through support brings the lows seen in March (3170) in focus.
Euro Stoxx 50 Price Chart: Daily Time Frame (Nov 16 – Sep 18)
DAX
The outlook for the DAX is somewhat fragile with the index trading at its lowest level in 5 months after the breach of the July lows. The psychological 12000 level has provided some support for the DAX, eyes will be on a break and close below this level for the index to make a run in on 11800. On the upside, resistance is situated at 12220, which marks the 38.2% fib level of the November 2016-January 2018 rise.
DAX Price Chart: Daily Time Frame (Nov 16 – Sep 18)
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--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
