Following an initial knee-jerk reaction in the market due to rising recessionary fears in the world’s largest economy, the market gained some ground the following week.
Both the US and European stock markets are trading with a positive bias, fueled by rising hopes of a Fed rate cut and tech stock gains.
On Monday, the Eurozone released its trade statistics. The trade surplus decreased slightly from €21.7 billion in June to €21.2 billion in July. Compared to July 2023, exports increased 10.2% yearly, while imports increased 4.0%. While the trade surplus fell slightly in July, it was significantly higher than in July 2023, indicating a stronger demand environment.
The European Central Bank moved ahead with a second rate cut for 2024, slashing borrowing rates by 25 bps to 3.65%. The move comes amid rising inflation and slower growth projections.
In the US, retail sales data released on Tuesday showed that inched higher by 0.1% in August, against the expectation of a 0.2% decrease. This is likely to give the market much-needed ammunition to keep its momentum strong.
Top Gainers and Losers in the European Stock Market
Top Gainers
The following are the top gainers in the last one week.
| Stocks | Last 7 Days Gains (in %) |
| DSV | 14.11 |
| Hennes & Mauritz | 11.96 |
| Industria De Diseno Textil | 9.36 |
| ASML | 6.23 |
| Schneider Electric | 5.04 |
Top Losers
The following are the top losers in the last one week across various sectors:
| Stocks | Last 7 Days Loss (in %) |
| Rentokil Initial | 19.11 |
| BMW | 5.57 |
| Genmab | 4.29 |
| Loreal | 3.64 |
| GSK | 3.29 |
In the last week, Producer Manufacturing, Electronic Technology, Technology Services, Transportation, Communications, Retail Trade, and Non-Energy stocks supported the market higher, while consumer non-durables and health Technology pulled the index lower.
Let us also see how the indices fared during the week
STOXX Europe 600
As global markets remain upbeat, Europe’s largest stock market index, STOXX Europe 600 index, continued to move higher to record its highest closing level in two weeks. In the last 5 trading days, the index has moved higher by 1.75%.
The index is gaining momentum and has broken above the 20-day EMA slope, implying that the short-term trend remains positive. Currently, the index is facing strong resistance at around 520, and failure to break above this level could result in a sell-off or the index trading range-bound. If it breaks above 520, the next major resistance level is 525.
FTSE 100
Economic headwinds in terms of stagnating growth due to contraction in manufacturing activity leading to mixed sentiments among investors.
Following the global cues, the UK’s primary stock exchange, FTSE 100, traded with a positive bias, and in the last five trading sessions, the index has inched higher by 1.27%.
On the daily chart, we can see that the index is trading between 8,300 and 8,200. The index is likely to look for a strong or clear trigger to gain momentum and break higher. If the index moves past the 8,360 level with strong momentum, it may approach the 8,500 level. However, momentum is the key, as weak momentum can lead to a sell-off in the market and a break-up below the 8,140 level.
CAC 40
The overall momentum in the index has shifted bearish as traders become more cautious about the French economy following the Olympics, most likely due to political uncertainty, flat earnings, and luxury sector concerns.
The CAC 40 has gained slowly compared to its European counterpart, rising 0.92% in the last five trading sessions.
Looking at the daily chart, the level around 7,500 has become extremely resistive, and the index lacks the momentum to break above it. If it fails to move above the 7,500 level, we might see the index testing the levels around 7,300 for support.
DAX
Overall, sentiment in the German economy remains strong. Stocks rose after the close on Tuesday, driven by gains in the retail, technology, and chemical sectors.
Also, better than expected retail sales data in the US will likely push the index higher. Following the global cues, the German index DAX has been up 2.09% in the last five trading days.
The overall momentum of the market is strong, and it has broken above the 20-day EMA slope with strength. If the index continues to move higher and break above the much resistive 18,750 level, we may see it go past the 19,000 level.
Conversely, the index has strong support around the 18,500 level.
Conclusion
As we move forward, European stocks are likely to follow global cues. Closely tracking the US central bank’s rate cuts and its commentary on future rate cuts will help you determine the market’s near-term momentum. Keeping a close eye on all market developments is critical for making sound investment decisions in these rapidly changing market conditions.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
