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  • One of the major developments that has happened in the equity market this month has been the breakout in European banks, with SX7P index (Stoxx 600 Banks) breaking through its LT downward trending resistance line.
  • The chart below shows that after hitting a high at 277.33 in July 2015, European banks equities have been constantly reaching lower highs in the past few years as the weakening global economy, low interest rates and the elevated uncertainty have been weighing on the entire sector.
  • However, the significant surge in liquidity in the past two years have been supporting global risky assets, and banks equities valuations have now doubled from their lows reached in March 2020.
  • We can see that the 200DMA has acted as a strong support in the latest bull market, and that the recent consolidation in the US Dollar combined with the upward retracement in LT bond yields have been supporting the recent short-term rally.
  • First resistance to watch above 160 stands at 168.90, followed by 180 (May 2018 highs).

Source: Bloomberg/MNI

MNI London Bureau | +44 203-865-3850 | yvan.berthoux@marketnews.com
MNI London Bureau | +44 203-865-3850 | yvan.berthoux@marketnews.com

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