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Jan 12, 2021, 2:05 PM GMT

Do Rallying European Stocks Need a Respite?

Similar to what we argued concerning the Nasdaq index yesterday, the German DAX seems to be in the same position. German share prices have been rallying alongside the global stocks hike, and now the biggest index in Germany has even managed to reach above the peak that was reached just before the coronavirus crash of early 2020.

While there are no apparent reasons why the DAX should start correcting immediately, an envelope of secondary contributing factors could momentarily stifle its progress. Firstly, there is the upcoming earnings season in the U.S., which is starting in just two days. The expectations for robust quarterly performance by America's bluechip companies could weigh down on European stocks' overall demand.

Secondly, the dollar has already started showing early signs of stabilisation, as expected, which could indirectly have an adverse impact on European shares valued in euros.

Thirdly, the fallout from the persisting political tribulations in the U.S. has already started to jolt global markets, which, in turn, would undoubtedly extend to the European equity market as well.

Profit & Loss
Short Term Long Term Net % Gains
+ - + -
625 BPS 0 0 0
Short Term
+ -
625 BPS 0
Long Term
+ -
0 0
Net % Gains

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