DAX, CAC and SMI Forecasts – Europe Jumps as Risk Appetite Gets a Boost

DAX Technical Analysis

The German index has pierced the crucial 25,000-euro level during the trading session on Wednesday, when some of the main drivers were technology and chips, but it’s also worth noting that BMW had a massive earnings beat in its earnings call, and this has provided a much-needed boost to the German industrial base.

Furthermore, and probably more importantly, the German 10-year Bund yield is now approaching the 3% level. It is dropping and that is the main story throughout the world when it comes to indices and basically just the way anything that moves. That being said, we’ve filled a gap from February and pulled back from it, so I think now we’re probably in a wait and see mode or maybe a “buy the dip” type of mode. We’ve probably gotten a little bit ahead of ourselves here.

CAC 40 Technical Analysis

In France, the CAC 40 looks like it is being driven mainly by the banking sector as AXA and BNP Paribas both have jumped right along with Societe Generale, all following solid results and forward guidance estimates.

The French industrial output for March grew by 1% month-over-month, doubling the expected 0.5%, signaling that the French economy is in fact proving to be a little bit more resilient to higher interest rates than they thought. The luxury sector has also seen gains as peace progress in the Middle East will help that, as LVMH, for example, has a huge footprint in the Gulf. French yields have dropped as well, so again it’s the same story.

SMI Technical Analysis

The Swiss Market Index has rallied pretty nicely during the trading session. While there are some mixed internals, the SMI has faced significant drag from Alcon, which plummeted 8.6% today. However, strength in some of the defensive heavyweights like Nestle and Roche have combined with the general risk-on attitude in Europe overall to lift the index towards the 13,400 level. Again, this is probably a buy on the dip index, but this, out of the three, will be the steadier grinding market.

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