European shares opened significantly higher at the start of a busy week, following a clearly bullish Asian trading session overnight. While new coronavirus cases continued to grow significantly over the weekend, with lockdowns even coming back in certain hotspots, investors’ focus is targeted towards the opening of earnings season this week. The optimistic mood remains with investors expecting solid corporate results which would be likely to provide stock markets with renewed momentum that would allow the current rally to extend to new highs. However, the fact that gold is still trading above $1,800 indicates traders are also seeking to hedge their exposure to stocks with safer havens in case corporate results disappoint and global uncertainty resurges. Even if the risk appetite remains high so far, some investors still do not know if this earnings season will be a festival or a bloodbath.
The Stoxx-50 Index continues to trade well above 3,300pts today with banking shares and the travel and leisure sector driving the benchmark higher. The price had a slight pull-back to 3,325pts following a failure below 3,350pts (76.4% Fibonacci). A clearing of 3,350pts would open the way to new targets at 3,365pts and 3,376pts by extension while further support levels can be found in the range between 3,320pts and 3,325pts and then at 3,312pts.
