Another day and another record finish on Wall Street, and the same momentum is filtering into the European markets. This momentum is unstoppable at-least for now and the equity markets only want to move up. Having said that, if the momentum does break, there is no doubt that the bears may fall flat on their backs.
The reality is that in Europe, traders are pushing the markets up on the back of the hopes that Mr Draghi, who is the president of the ECB bank will trigger another round of QE and the chairwomen of the US central bank is keeping her tone very dovish on the other side of the Atlantic, a perfect bull scenario. Investors are certainly refusing to factor in the geopolitical tensions between Russia and Ukraine which could have a devastating impact on the global economy, especially in Germany, which is the biggest trading partner and the economic engine of the Europe.
Another important factor which investors have not taken under consideration is the speech from the Chinese president XI who took his time in explaining yesterday that a new norm for his country’s growth and tried his best to beat the drums of no further easing program in the pipeline from his government. This is despite the fact that the economic data released today for the country was crying out for help. The retail data was the weakest, especially if we believe that China is changing its economic structure. The final number was at 11.9%, while the forecast was at 12.2%. But, we do know that a bull market always ignores the bad news and only factors in the good news.
Back in Europe, the economic calendar is full with important data. We will kick off with German ZEW and we expect this number to be on the weaker side. The data is due at 09:00 GMT and the forecast is for 41.3 while the previous reading was at 43.2. Later in the day, we do have the core retail data due for the US and given that the US Q1 GDP was weak, so we really need a strong number for core retail data which can show that consumption has picked up.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.