Germany’s DAX and rest of European equities opened lower on Tuesday, as global economic and political uncertainties dominated the market. However, as minutes passed after the open, the DAX turned green with a slight increase of 0.22%.
Investors were awaiting the release of key data such as preliminary euro area GDP data and the ZEW survey on German economic confidence.
All traders were trying to play down US default risk as talks resumed today to raise the country’s debt ceiling.
Debt ceiling worries rattled markets as the US Treasury said the government was headed for default on June 1 if no solution is found. “Extraordinary measures” may push back the actual date of default, but again, this is an issue that has the potential to cause significant volatility in financial markets.
Turkey’s presidential election, on the other hand, will go into a second round as neither incumbent President Tayyip Erdogan nor his main rival Kemal Kılıçdaroğlu won a majority.
Investors are also awaiting Euro Zone GDP, employment, trade and economic confidence data to assess the economic health of the region.
In the corporate sector across Europe, results from Siemens Energy, Vodafone and Greggs will be published.
Vodafone made headlines by announcing plans to streamline its operations that would see 11,000 job cuts over three years, while Telecom Italia’s shares fell following reports that Macquarie would be blocked by the Italian Treasury to acquire the company’s fixed telephone network. There is a legal impediment to the supported plan.
Meanwhile, French construction and telecommunications group Bouguez posted an unexpected quarterly operating profit and UK online fashion retailer Boohoo beat expectations by offering a strong core profit forecast.
Overnight, Asian indices were mixed, with the Nikkei and Hang Seng but the ASX200 and Shanghai Composite lower. As earnings season winds down, and this week’s economic calendar is largely fueled by second order data, the debt ceiling issue will be the main driver for markets in the second half of May.
Technical Analysis: DAX 40
Scenario 1: A 30-minute closing target above 15,929.1 will increase the odds of a rally to 15,981.8 points.
Scenario 2: A 30-minute candle close below 15,872.6 will increase the probability of a fall to the target of 15,819.9 points.