Futures on the Euro Stoxx 50 Index (SX5E) may advance for a second week after contracts for the gauge of euro-area stocks formed a bullish price flip last week, according to a technical analyst at BBSP SAS in Paris.
Euro Stoxx 50 futures completed the bullish technical indicator by closing at a higher price on April 26 than they did at the end of trading four weeks earlier.
“This is a short-term signal of a switch in market dynamics,” Jean-Charles Gand, a senior market strategist at the brokerage, said in a telephone interview.
Contracts on the equity benchmark added 0.8 percent to 2,656 at 1:17 p.m. in London today. The Euro Stoxx 50 has climbed 4 percent so far in April, its first monthly advance since January, as companies reported better-than-expected earnings and speculation mounted that the ECB will cut interest rates. The central bank will lower its key rate to 0.5 percent at a meeting on May 2, according to the median estimate in a Bloomberg survey.
Gand said futures expiring in June may climb to 2,700 in the next five days, implying a 2.5 percent increase from the close on April 26. The strategist added that generic Euro Stoxx 50 futures may rally 29 percent to 3,400 in the next six to 12 months, or to 3,700 in a best-case scenario, which would represent a 40 percent surge.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
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