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European stock indices rebounded on Wednesday following two days of steep declines triggered by geopolitical tensions with Iran. The German DAX, French CAC, and Spanish Ibex all saw double-digit percentage drops from recent highs before recovering ground. Technical analysis shows the DAX closed above its 200-day moving average, a key bullish signal, while the CAC remains above its 200-day average despite falling below the 100-day level. U.S. markets also gained momentum, with the S&P 500 and NASDAQ indices trading above key moving averages. The rebound suggests short-term volatility but raises questions about the sustainability of gains amid ongoing geopolitical risks. The recovery in European markets is critical for global investors as it impacts cross-asset correlations. The DAX's retest of its 100-day moving average at 24,396.12 will be a key technical level to watch. For traders, the interplay between U.S. and European indices could influence risk-on/risk-off dynamics. The S&P 500's move above 6,835.47 and the NASDAQ's position between its 100- and 200-day averages indicate mixed signals for equity bulls. MENA investors should monitor how European recovery affects Gulf equity markets, particularly given the region's exposure to global trade. The U.S. dollar's performance against the euro and other currencies will also be pivotal. Key watchpoints include the DAX's ability to hold above 24,205.37 and the S&P's resistance at 6,900 levels. Central bank policy responses to geopolitical risks could further shape market trajectories.
