The beginning of the week saw good economic data coming out of Europe, but it was unable to stabilise the falling equity markets. Improving German monthly industrial production and better-than-expected French trade balance figures have given some credence to an improving picture for mainland Europe.
Today’s sale of five-year Greek sovereign debt will test exactly how confident and optimistic traders really are. Of course, the fact that Greek unions have decided this is a suitable day for their first mass strike of 2014 is a timely reminder of the risk involved.
The flipside of the optimistic coin are the worrying sound bites emanating from Ukraine, as the template for change in Crimea is being replicated in cities like Donetsk. Russia still has a sizeable number of troops 75km away from the border, leaving the Ukraine government unsurprisingly edgy.
After over 160 points were knocked off the Germany 30 in the first two trading days of the week, traders have decided that the positives outweigh the negatives and have bought back in. Looking at the chart, the index has successfully used both the 50- and 100-day moving averages as support to maintain this move. As long as the index is able to keep closing above the 9390 level, we would maintain our current stance.