After the widespread losses of last week, futures point to a weekly start in the red , with declines, yes, that would not reach half a percentage point.
After a small summer rally , the Eurozone CPI data reached a new high of 9.8% and led fixed income to accumulate further losses, paving the way for higher rate hikes at the next ECB meeting. , which also admitted the possibility of seeing a recession.
From a technical point of view, “sales prevailed last week after the EuroStoxx 50 reached 3,820 points, close to the first objective it was driving and where the June highs are that have already stopped the last rebound; I would be very surprised if it formed a relevant correction in the European stock markets without these highs being reached, so I consider that the latest falls are a simple consolidation of part of the latest rises, after which we could witness an attack on that resistance of 3,855 points”, explains Joan Cabrero, adviser to Ecotrader.
“The area of 3,695 points is now the support that the European reference must lose to speak of a buying exhaustion and as long as that does not happen, we will continue to trust in the control of the bulls in the short term, although if it were to lose it, it would be a back to the old resistance of 3,600/3,620 points”, concludes the expert.
Fixed income purchases return
After the strong sales of last week, futures point to net purchases this Monday in a context in which the inflation data marked a new maximum in the euro zone and the ECB admitted, through Isabel Schnabel, a member of the board of government of the organism, that there could be a rise of 50 points in the next meeting to stop the escalation of prices despite the fact that the possibility of a recession is real.
The euro returns to peek at parity
Another consequence of the divergence in rhythms and data that is taking place lately between the Old Continent and the United States is that the euro has weakened against the American currency. Parity already came to touch last June and today it clearly peeks out again .
In addition, this week comes with important data that can move the currency market such as the GDP of Germany and the United States of the last month .
China lowers its benchmark rate
The People’s Bank of China (BPC) announced on Monday that it will lower its reference rate for loans by five basis points, from 3.7% to 3.65%. The reference rate for credits (LPR) to one year had registered its last variation last January, when the central bank cut it from 3.8%. The institution has also announced a reduction of 15 basis points, from 4.45% to 4.3%, for the five-year LPR, after experiencing a similar reduction in May.
These decisions meet the expectations of analysts and investors that the BPC would make a move given the data that shows a slowdown in the recovery of the national economy. A week ago, the institution had already announced reductions of 10 basis points in medium-term loan facilities (MLF) and reverse repurchase agreements (“repos”), important financing tools of the banking system.