European stocks start the year out strong

European indices are trading strongly today as global risk sentiment has improved, with Asia providing a clear positive lead. Overnight gains in Asian equities, helped by a rebound in technology shares and a weaker yen supporting Japanese exporters, set a constructive tone for European futures into the open. In the absence of any fresh negative macro or policy surprises, that positive handover has encouraged investors to add risk across European markets.

 
Broader macro conditions are also supportive. Recent US data have reinforced the soft-landing narrative, while bond yields have stabilised, easing pressure on equity valuations. This environment tends to favour Europe, where markets are more cyclical and rate sensitive. Financials, industrials and exporters, key components of major European indices, have benefited from firmer growth expectations and improved global sentiment, particularly given their exposure to Asia. Also, positioning and seasonal dynamics are amplifying the move. With many investors still defensively positioned, portfolio rebalancing flows may also be driving the positive momentum.
 
This positive risk appetite has driven the DAX 40 to new highs after a steady buildup through the latter part of December. Resistance seems to be present around 24,820 but the upward sloping trendline is likely to keep the momentum on the upside for now.
 

DAX 40 daily chart

 
Past performance is not a reliable indicator of future results.