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European Stocks Surge After Losing for 4 Sessions

The news shaping the markets today

The US warned that Russia may be preparing for a chemical attack in Ukraine, which sent the WTI crude oil futures higher this morning.


Japan’s producer prices rose by 9.3% year-over-year in February, following a 8.9% increase in the previous month, exerting pressure on the JPY/USD forex pair.


New Zealand’s electronic card transactions fell 7.8% in February, recording the first decline since August of 2021. The news sent the NZD/USD pair lower in forex trading this morning.


Australia’s private house approvals dipped 17.5% to a nine-month low of 8,712 units in January, versus a 0.3% decline in the previous month. The recent reading signalled the third consecutive month of decline, exerting pressure on the AUD/USD forex pair.


Argentina’s industrial production contracted by 0.3% year-over-year in January, following 10.4% growth a month ago. Industrial output shrinking for the first time since August 2020 sent the ARS/USD pair slightly lower in forex trading this morning.

 

What’s happening: European markets recorded strong gains on Wednesday, after declining for four straight sessions.

What happened: European stocks had been on a steep downturn due to concerns around Russia’s ongoing invasion of Ukraine.

While European equities spiked, commodity prices took a breather on Wednesday, with traders monitoring the impact of US President Joe Biden’s announcement to ban oil imports from Russia.

Why it matters: Stock markets across Europe remained volatile on Tuesday, finally closing the session slightly lower, after US President Joe Biden announced plans to ban Russian oil imports, following Moscow’s attack on Ukraine.

The recent move by the US sparked fears of a further surge in oil prices due to supply concerns. Crude oil spiked on Tuesday following Biden’s announcement but eased on Wednesday. WTI crude futures dipped 5.7% to settle at $116.53 per barrel.

Investors also continued monitoring major earnings releases, with companies like Adidas, Deutsche Post Continental and Prudential reporting results on Wednesday. Shares of Adidas climbed over 13% after its earnings report, while Deutsche Post’s stock rose more than 12% after the company posted 65% growth in its 2021 operating profits.

Investor sentiment was also supported by France reporting a spike in payroll employment in the private sector by 117,900 to 20.06 million for the fourth quarter of 2021, versus an addition of 109,500 in the prior three-month period. France’s CAC 40 jumped 7.13% to close at 6,387.83 on Wednesday.

The pan-European STOXX Europe 600 index gained 4.7% to close at 434.45 on Wednesday, recording its best session since March 2020. The STOXX 600 has lost around 13% year to date.

Auto stocks were among the top performers, adding close to 10% on Wednesday, with most sectors closing the day in the positive zone. Oil and gas stocks bucked the overall market trend, declining around 2.5%.

London’s FTSE 100 rose 3.3%, while Germany’s DAX 40 added 7.92% on Wednesday.

What to watch: Investors will keep an eye on the ECB’s monetary policy meeting today for some insight into policymakers’ reaction to rising inflation and the ongoing Russia-Ukraine concerns.

The markets today

Bitcoin will be in focus today after recording sharp gains on Wednesday

 

Context: Bitcoin prices rose on Wednesday, following US President Joe Biden’s executive order on digital assets.

Details: The US Treasury Secretary Janet Yellen accidentally published details of Biden’s crypto order. Although the statement was unpublished shortly, it was captured on a web archive. Yellen’s statement was republished on Wednesday.

The statement said, “President Biden’s historic executive order calls for a coordinated and comprehensive approach to digital asset policy. This approach will support responsible innovation that could result in substantial benefits for the nation, consumers, and businesses.”

Bitcoin rose overnight on Wednesday, following the release of Yellen’s statement, gaining from around $38,807 to breach $42,000. Ethereum prices surged to $2,750.

However, Bitcoin pared recent gains and fell below the $41,000 mark this morning, while Ethereum declined to $2,670.

What to watch: Traders will monitor the recent executive order from the US President, which is expected to expand the adoption of virtual currencies in the country’s financial system.

Other Markets: US indices closed higher on Wednesday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 2.00%, 2.57% and 3.58%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD – 1.1041 and 1.1053 Positive
USD/JPY – 115.99 and 116.14 Positive
Copper – 4.5836 and 4.6211 Positive
Nikkei 225 – 25358.84 and 25514.84 Positive
FTSE 100 – 7126.24 and 7175.14 Positive

 

Market snapshot

What else to watch today

Saudi Arabia’s industrial production, Turkey’s unemployment rate, labour force participation rate, car production and foreign exchange reserves, Italy’s producer price inflation, South Africa’s current account, gold production, mining production and manufacturing production, Brazil’s retail sales and industry confidence indicator, US inflation rate, initial jobless claims, continuing jobless claims, natural gas stocks change and government budget, Germany’s current account, China’s new yuan loans, outstanding yuan loan growth, total social financing, broad M2 money supply and net payrolls, as well as Russia’s gross domestic product.

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