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Risk sentiment improves heading into the U.S. open

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(Kitco News) - Risk sentiment in the equities markets improved this morning as it seems traders are betting stimulus could be here for longer. The latest eurozone data showed GDP was down by 0.3% and employment also fell 0.3% for the first quarter of 2021. It has to be noted that much of the area had been in lockdown or restrictions were imposed. 

The Eurostat report noted In the first quarter of 2021, seasonally adjusted GDP decreased by 0.3% in the euro area and by 0.1% in the EU compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union. These declines follow falls in the fourth quarter of 2020 (-0.6% in the euro area and -0.4% in the EU) after a strong rebound in the third quarter of 2020 (+12.6% in the euro area and +11.7% in the EU).

In terms of the top-performing countries, Ireland (+7.8%) and Croatia (+5.8%) recorded the sharpest increases of GDP compared to the previous quarter. The biggest declines were observed in Portugal (-3.3%) and Slovakia (-2.0%), followed by Germany (-1.8%). 

Elsewhere, German ZEW data for June reported a large miss on the headline of 79.8 vs expectations of 86.0 but landed within the range (low 75.0) and in context, the previous reading was a multi-decade high.

German ZEW Economic Sentiment arrived at 79.8 in June, down from 84.4 previous. The ZEW Current Situation print came in at -9.1 in June vs. -40.1 in May beating the previous number by some margin. 

The 1-hour Dax futures chart below shows a pop in the price on the last hourly candle backed by some decent volume. The key feature on the chart is the rising wedge formation and the previous wave high at 15730. If the aforementioned wave high breaks, it would mean the index would print at another all-time high. On the downside, there are a couple of significant zones. One is the value area of the current distribution at 15641, this could be a sticky point for the price. Below that, the green support zone looks like the next most important support at 15600. 

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