Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Where’s my self-driving car? - 16th Aug 22
Real Reason why Pakistan and India Gained Independence in 1947 at 75th Anniversary - 16th Aug 22
Electronic Payments Can Benefit Your Business - Here’s How - 16th Aug 22
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Euro Markets: ECB Stance Supports Stocks

Stock-Markets / Global Stock Markets Dec 28, 2017 - 03:51 PM GMT

By: Dividend_Investors

Stock-Markets

Global stock markets managed to garner most of the public attention in 2017, as a strong sequence of new record highs was posted in many of the most closely watched equities benchmarks.  But the real question is whether or not we will see quarterly earnings performances through the next few quarters that actually support these rallies.  At the macro level, we are still seeing several scenarios that support the bullish outlook in these areas.  But if you are an investor that is focused on the Eurozone region, it will be critical to watch for new developments within the central bank. 


At its most recent meeting, the European Central Bank (ECB) outlined its plans to continue with its monetary stimulus programs if it is found that there is still sufficient need for economic support.  Key indicators here will be the regional unemployment rate, as there is still limited reason to believe that we will see any material changes in the underlying consumer inflation level any time soon.  Additional factors to watch will include industrial production, as this is a critical predictor of both the regional unemployment rate and the trend in consumer price pressures.

The impact on the Euro has already become apparent, as the Guggenheim CurrencyShares Euro Trust (NYSEARCA:FXE) is now posting a series of lower highs on the daily charts.  If we are not able to see a clear break back above the 115 level, we will maintain the negative bias on the assets that are most closely tied to the Euro.  The ECB is in no position to begin raising interest rates at this stage, as overall growth figures remain tepid and most of the voting members within the central bank seem to be suggesting the need for more stimulus sometime later.  To the downside, FXE faces important support levels at 112.95 and a break here could accelerate losses to the downside.

When we are dealing with stocks, the outlook is clearly different as the iShares MSCI Eurozone ETF (NYSEARCA:EZU) is still holding near its highs.  These types of trends are typically traded through exchange traded funds because the weaker outlook on the interest rate front suggests that corporate earnings should continue to be supported by a flexible monetary environment.  In other words, a large number of European should be aided by these stances in a number of different sectors.

The ECB could be one of the most closely watched central banks in 2018 as there is still conflicting evidence that monetary stimulus is needed in the region.  If this is the case, it will not likely help the positions for investors positioned with exposure in currency markets assets.  But if you are looking at the corporate sector as a means for new trading ideas, there is likely to be a very different outcome if the ECB maintains its current outlook for the economy. 

By Dividend Investments

© 2017 Copyright Dividend Investments - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in