Europe To Open Higher As Chinese Data Boosts Mood

Positivity from Asia overnight is spilling into Europe, with stocks opening on the front foot after the extended Easter weekend

Charts (4)

Positivity from Asia overnight is spilling into Europe, with stocks set to open on the front foot after the extended Easter weekend. Less gloomy than forecast Chinese trade data, in addition to more talk about exit strategies is lifting sentiment ahead of the start of the US earning season this afternoon.

Chinese trade data
Chinese exports fell -6.6% year on year in March, whilst imports slipped 0.9% in the same period. Analyst had expected a 14% fall in exports and a 9.5% decline in imports owing to the hit from the coronavirus lock down. However, the better than forecast figures have lifted optimism that the economic damage is not as bad as initially feared. China’s first quarter GDP release will be closely watched on Friday, the broad expectation is that Q1 GDP contracted -6% versus 6% growth in the final quarter of 2019.

US earnings
Today sees the start of US earning season. US banks and economy bellwethers will be kicking off the season. According to FactSet earnings from S&P 500 firms are expected to contract -10.2%, compared to gains of 6.3% expected in January. Last week, following the dismal US initial jobless claims data, the US stock market still managed its best week of gains since 1974. Investors will be watching closely to see whether the bad news has already been priced into the share price. 

Germany to end lock down?
Pressure is growing on Angela Merkel to ease lock down measures and start to reopen the economy as the coronavirus daily death count drops to 176, putting the total at 2,799. The number of new cases was 2,2218, marking the fifth straight day of declines and the lowest increase this month. Angela Merkel, who has urged a cautious approach will give a videoconference tomorrow amid growing calls for a road map to normality.

There is no high impacting data due today. German inflation data is due to be released on Thursday. Chinese GDP on Friday will also be closely watch for clues as to how hard the world’s second largest economy was hit in the quarter of its covid -19 lock down

DAX levels to watch:
The Dax is set to open over 1% higher on Tuesday, as the index continues its recovery from its March 19th low. 
Immediate resistance can be seen at 10796 (overnight high futures), prior to 11040 (10th March high) and 11530 (8th March high)
On the flip side support is seen at 10585 (trend line) prior to 10150 and 9335 (2nd April low).

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