European stocks opened on a mixed tone on Tuesday as rising concerns and uncertainty globally put pressure on prices. Investors who chose to take profits following the rally since the 23rd of March may be tempted to keep on doing so after new virus cases were recorded in South Korea and Wuhan, highlighting fears of a new wave. We are now in a crucial phase where investors, after the recent mixed data and corporate results, desperately need more clarity on the short to mid-term outlook. Even though most market operators believe the virus peak is now behind us, they still need more evidence that economies are back on track and that the pathogenic agent is firmly contained before increasing their exposure to risk assets. Additionally, market sentiment is being shaken by rising US-China tensions, especially after President Trump declined a request from Chinese officials to renegotiate the Phase One trade deal. Traders now have to deal with two different bearish leverages on stocks: the 2020 virus crisis as well as a resurgence of 2019’s trade tensions between Washington and Beijing, which is making for a very difficult trading environment ahead of the summer season.
The DAX-30 Index is one of the eurozone’s worst performers with the price dancing near its open price level. Technically, the market has failed to clear the 10,980-11,120pts zone previously mentioned and slipped back to their double support (trendline + 55-day moving average). Even if a pull-back towards 11,000pts remains possible, a break out down below the support level at 10,770pts is now the most likely scenario on a short-term basis. If that support fails then the subsequent ones are at around 10,545pts and 10,200pts.
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