Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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It's Too Early for a European Stock Rally

A rally in global stocks had filtered through to the European stock market. It brought the German 30 index back above support. 

Despite solid gains, it is still too early to consider buying European shares

GER30 – Weekly Chart

ger30 weekly chart

The weekly chart on the GER 30 highlights the critical support level and the damage that has already been done. The 12,500 level has given some respite to the index, but there are still many risks for the region. 

The latest talk in the Eurozone is for a proposed cap on gas prices in the region. EU Commission President, Ursula von der Leyen, has opened the door for a targeted and temporary EU-wide cap to cut prices and stop market speculation. But she also noted the risks that the potential cap brings.

"While gas prices have come down in the past weeks, they remain very high and burden people and our economy heavily." 

"We need to protect our single market, which has repeatedly provided resilience in the face of crisis," she added. 

The proposed cap would have two systems working parallel with a cap on the Title Transfer Facility (TTF), Europe's leading benchmark. This brings suppliers and clients who sign deals for immediate and future gas deliveries. The TTF prices are in euros per megawatt-hour and are the critical index for European gas settlement. 

"The Title Transfer Facility is no longer representative of the imported gas," von der Leyen said. That is due to the effects that Russia's supply cuts and market speculation are having. 

While the Commission works on a "complementary" pricing system, they would impose a "price limitation" on transactions based on the TTF. A second price cap would be used for electricity generation. In the EU market, electricity prices are set by the most expensive fuel needed to meet power demands. Gas has created pressure on energy firms and consumers this year. 

"We should limit this inflationary impact of gas on electricity, everywhere in Europe," von der Leyen said. 

Although it is a positive step for the Eurozone, a price cap may cause more problems than it solves. There is still no sign of peace in Ukraine, and the winter still has energy supply risks for businesses.

Last Updated: 06/10/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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