FxWirePro: Eurostxx 50 bulls are likely to push for another 10 percent

The global financial markets handled the unexpected outcome of the UK referendum better than expected and the equities all around the globe have performed much better than expected. Though European equities are lagging their global partners due to fear of a financial contagion especially through banks, we expect the bullish sentiment to continue.

And that is due to the following factors,

• European Central Bank (ECB) kept alive the possibility of further stimulus
• Lower rates for longer from the U.S. Federal Reserve
• China avoiding a hard landing so far and likely to do so in 2016
• Oil price recovery along with other commodities
• Brexit referendum storm was caused less havoc to sterling and currency market than expected
• Fresh stimulus hopes from the Bank of England (BoE) and Bank of Japan (BoJ)
• Wishful thinking that the UK would finally remain in the European Union through a second referendum

Hence we expect that the Euro Stoxx 50 to keep benefiting from the above factors and rise at least another 10 percent from the current price of 2977. The gains may extend to 3300 area. Key support lies at 2730 area and resistance at 3200.