European equity markets headed lower on Wednesday amid renewed concerns about the wider impact of the recent banking crisis. First Republic shares slumped 49.4% on Tuesday, after the US-based regional bank revealed that deposits shrank by 41% to $104.5 billion in the last quarter, much more than analysts expected.
Investors are now looking forward to earnings reports from major European companies such as Standard Chartered, Deutsche Boerse, MAN Group, Roche and Dassault Systemes. The market will also assess a number of European data including Italian GDP, as well as German and French consumer confidence data.
Meanwhile, Germany’s GfK Consumer Climate indicator increased for the seventh month in a row to -25.7 heading into May 2023, the highest since April 2022, and compared with market estimates of -27.9. Earnings expectations were the main contributor to gains (up 13.6 points to -10.7), increasing for the seventh straight time and continuing to levels reached in February 2022 just before the start of the Ukraine war, driven by more moderate energy prices on the back of various government programs to compensate for high energy costs for households and businesses. Also, economic expectations continued their upward trend (up 10.6 points to 14.3), and propensity to buy increased for the third straight month (up 3.9 points to -13.1).
Technical Review
GER40,D1
The GER40 still maintains the rally near the 2022 highs, but opened the week slightly to the downside. The daily chart view shows the formation of the 5th Elliot Wave in progress, and traders are starting to look to be a bit flat below the recent resistance. The RSI is moving away from the overbought level, currently at 58 and on the MACD there is a speculative sell signal crossing in the buy zone. The divergence bias of the two indicators is visible and requires confirmation.
A trade above 15,923 would confirm continuation of the bullish trend with possibility to test the 16,287 high, while a move below 15,703 support could test 15,479 support and cloud the outlook. Technically, the Index is still in a bullish trend with the price moving above its 26-day exponential average.
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Ady Phangestu
Market Analyst – HF Educational Office – Indonesia
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