European equities edged higher on Friday, extending the significant advance registered yesterday amid rising investor appetite for riskier assets. Market sentiment has been given a fresh boost by a reportedly “constructive” phone call between the US and China yesterday and investors were relieved to hear the two blocs were moving on with the trade negotiations, especially after this week’s rising belligerence between Washington and Beijing.
Though the damage caused by the Covid-19 crisis is unprecedented, so was the stimulus response from nations and central banks around the world. This has prompted investors to start betting on a recovery more recently. Expectations that the FED could even go into a negative interest rates environment boosted sentiment yesterday and made the US Dollar sink. Although many US officials have said they do not see negative rates as appropriate in the US the market seems to be already starting to price that in, ahead of today’s anticipated US job report. This is seen a dangerous move though as the market could suddenly move south if investors were disappointed by the FED.
Photo by Adam Niescioruk.
The DAX-30 index is currently the best performer in the euro zone, with higher volatility expected today. The market is trading significantly above its first major support at 10,770.0pts but remains capped by the 11,120.0pts/10,980.0pts resistance zone. The DMI indicator shows a bullish pressure but with lack of directionality, which makes the end of the trading week more uncertain.
