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Stocks in mainland Europe are underperforming compared to their UK equivalents. This round of selling was brought on after Brussels predicted that the region would have a high jobless rate for the next two years. The current rate of unemployment in the eurozone is 12.2% and the Commission foresees this falling only to 11.8% by 2015; still stubbornly high.
While the eurozone emerged from recession in the second quarter of this year, the Commission has now revised its original growth forecast for 2014 from 1.2% down to 1.1%. This could leave the door open for further forecast trims.
The Spanish equity benchmark is off 1.25% after the number of people out of work jumped by 87,000 in October; much higher than 31,000 analysts had predicted.
News from the eurozone isn’t all bad, however, as Sky Deutschland is up 5.7% after posting a 57% rise in earnings before tax. This compares well with the rest of the German index which is trading just below the 9000 mark, 0.4% lower on the day.
The weekly chart on the DAX tends to suggest that a correction may be in the offing. Having reached all-time highs over the past week, the index is finding it difficult to keep a toehold above the 9000 level. With price action trading some 10% above the 50-week moving average, a mild correction would not necessarily upset the overall medium-term trend. The doji candle from last week, along with the overbought signal on the 10-week RSI, indicates that traders should keep a close eye on any weekly close below the 8950 level.