Article / 16 March 2017 at 12:34 GMT

Mid-session Europe: Sigh of relief spurs equities higher

Saxo Markets
Denmark

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Dutch nationalist Geert Wilders may have picked up a few seats in yesterday's election, but his Party for Freedom (PVV) was ultimately decimated by the centre-right incumbent Mark Rutte's People's Party for Freedom and Democracy (VVD), which took 33 seats to the PVV's 20.

As the third major "populist risk event" after Brexit and the US election, Wilders' defeat is being hailed as a victory for the European Union, for the euro, and for the political centre.

European bourses are rallying on both this result and on the back of yesterday's dovish rate hike from the US Federal Open Market Committee. While the greenback is attempting to recover some of yesterday's post-Fed losses, the trend remains lower.

Watchlist 

  • US March Philadelphia Fed Business Outlook (1230 GMT) 
  • US Initial Jobless Claims (240K exp., 1230 GMT) 
  • US February Housing Starts (1.26M exp., 1230 GMT)    

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Forex developments

FX markets are witnessing a weak attempt at USD index recovery from the post-FOMC selloff seen in the first half of the European session, with the 100.50-60 level staying as near-term resistance. The current 100.45 area, being a 100-day exponential average, contains potential for becoming either the local support or resistance (if 100.5-6 is breached/not breached).

EURUSD maintained above 1.07, supported by the Dutch election outcome and harmonised EU CPI numbers matching expectations at 2% (year-over-year) – the European Central Bank's inflation target.

USDJPY is struggling above 113, with additional support building lower from the 100-day EMA near 112.50. The Bank of Japan's Kuroda commented that the bank is satisfied with current yield curve control measures earlier in the session, which may signal that no change to current policy is being considered.

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European stock markets are trading higher on stronger-than-average volume after a slightly less hawkish statement from the Federal Reserve and a stabilising result in the Dutch elections. The Stoxx Europe 600 index is up 0.56%, with all sectors in positive territory and on track to close at its highest level since December 2015.

Anglo American shares are up 9% and leading a rally in the miners. Billionaire Anil Agarwal has bought a 12% stake via family trust Volcan Investments. The sector has also been helped by a pullback in the USD.

Renault falls 4% following media reports that the French carmaker could face fines for breaching emissions rules.

German airline Lufthansa is up 4.5% as cost-control efforts helped the company beat analysts’ expectations and record a better-than-expected net profit for 2016.

Norwegian aluminium group Norsk Hydro is up 6% after an upgrade to "overweight" by JPMorgan with a price target of 58.

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Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.





Amsterdam Amsterdam at dusk: Dutch voters roundly rejected the nationalist Geert Wilders yesterday, leading to a broad rally in support of the embattled status quo. Photo: Shutterstock

— Edited by Michael McKenna

The Global Sales Trading desk is a multi-asset team providing customised trading solutions

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