European stocks outlook: Trade announcements vs economic data

  • by Ofeed Team
  • July 2, 2019, 18:46 AM
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The positive latest developments in trade talks between the United States and China's helped European shares to rise strongly, completely ignoring the weak euro area manufacturing data released on Monday.

But many analysts claim that the rally in European would be short-lived, with economic growth faltered, and the United States returning to the trade war but this time with a possible tariff on EU goods.

Euro Stoxx 50 is entering its best month, as the index has risen 2.9 percent on average in July over the last 10 years, except for two years. The notable difference that the month of June was well this year and European stocks experienced to the best half-year since 1998.

While the German DAX index has returned to its upward trajectory, driven by commercial optimism after the G20 summit. As the data shows a 1.01 percent increase from the past month, while it is currently moving in overbought areas.

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JPMorgan strategists say while the manufacturing PMI indicators are approaching their lowest levels now, they are likely to improve in the second half of the year. Other factors such as the central banks’ monetary easing and weakening dollar could help stocks sustain their bullish run.

It is not surprising that 75% of investors say that the trade situation between the United States and China is the main engine of stock prices over the next three months, according to a poll conducted by Citi. This means that if the flow of commercial news on the positive side, other factors can be reversed. 

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