The power of emotions affect prices and trends in the markets.
Whats the risk that the Euro breaks up? Which country is the most exposed? Whats the routes of infection?
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A look at the investor positioning data measured by sentix shows that investors have increased their equity quotas in the last two months. A sub-investment has turned into an over-investment. How does this change the risk situation for equities?
The term of office of ECB President Mario Draghi was dominated by the struggle for the stability of the euro area. While the ECB was still confronted with serious doubts about stability in 2012, the situation has changed significantly to this day. The sentix Euro Break-up Index is close to its all-time low.
The mood on the stock markets has improved significantly in recent weeks and has reached a level that has rather marked upper turning points in the last 18 months. A closer look at the data reveals a relatively low number of bulls. In other words, many neutrally tuned investors are behind the good mood. And that in turn usually means a rising volatility!
A month ago, we discussed the development of German equities in the strategic bias and the question of whether a negative Q4 development like 2018 could be repeated in 2019. So far, the development in the bias has diverged so strongly that there is little to suggest a repetition of the weak share price development. The situation is different for bonds!
Is an unregulated Brexit coming or is the economy picking up? The news remains uncertain, but investors are deciding: the stock bias is on the rise, safe investment havens such as gold and bonds are suffering a loss of confidence. Currencies are also on the move: The bias at EUR/USD is pointing upwards and is thus going into advance performance, positioning and exchange rate should follow soon.
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