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The Euro Stoxx 50, like many of the individual equity markets around Europe, continues to flirt with its longer-term support, using the 200-day moving average as a crux while being unable to break above the 100-DMA.
This morning has seen the release of the latest eurozone inflation figures; as expected they have been unable to increase, and the core yearly consumer price index has remained at 0.8%. This is some way short of the European Central Bank’s targeted 2% level. Unfortunately the factors that have seen the UK inflation rate surge have not been replicated in mainland Europe.
Even though economic data coming out of the eurozone is unimpressive, there are a number of positives that they can take from the global picture. Chinese growth and sentiment continue to creep higher – some way short of previous year’s levels, but heading in the right direction. The eurozone is also benefiting from the weakness in the EUR/USD rate, as it is once again approaching the key $1.3505 level. It is fair to mention that much of this move is down to the US side of the equation rather than the euro.
With US corporate results continuing to impress the positive sentiment from across the Atlantic should be enough to prop up the Euro Stoxx 50, and prevent it from falling below its longer-term support.