Calmer tones set to greet Europe today

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US stocks rallied late yesterday to finish with a flourish and that is helping to exude calmer tones as we look towards European trading today. Regional equities had a rough showing yesterday after the dreadful PMI readings from France and Germany, which exacerbated worries about the ECB hiking into a recession.

The DAX closed at its lowest level since March as European indices in general look to be on the edge of a bigger drop. The German economic situation is not helped by the gas shortage with the government announcing a move to phase two of the gas emergency plan. Here’s a look at the DAX on the daily chart:


While European indices are still facing a rough week, US indices look set for a decent bounce after what was a rather awful showing last week. One can argue that the rates outlook is perhaps key at the moment, more so than the economic outlook. The terminal rate pricing for the Fed has come down to around 3.50% from around 4.00% and that is helping with the mood in equities perhaps.

For now, futures are pointing to calmer tones and that could see equities bookend the week with gains at least. Here’s a snapshot of things at the moment:

  • Nikkei +1.1%
  • Hang Seng +1.4%
  • S&P 500 futures +0.7%
  • Nasdaq futures +1.0%
  • Eurostoxx futures +1.0%
  • Germany DAX futures +0.8%