Share markets in Europe: Volatility comes back

Over the past few months, the euro-crisis had weakened a bit but now, the problems seem to come back. This means that the prices especially on the markets in Europe but also beyond them may show greater fluctuation margins- although the news from the economy are relatively positive in general.

Bad news for investors having invested their money in shares are not necessarily bad for binary option traders. While shareholders fear a high volatility on the markets, such periods offer great chances for binary options. After all, with these instruments, you can both benefit from rising and falling prices if you correctly predict the price developments.

Interest rate decisions can have a strong effect

Only on Friday, investors witnessed a typical example for the great volatility of the prices as they observed the development of the DAX.

Investors got to see a typical example for the great volatility on Friday as they observed the performance of the DAX. First, the turnovers were very low because most of the investors wanted to await the interest rate decisions of the ECB. Once it became clear that the ECB maintains the headline interest rates on a level of 0.75 per cent, the index dropped and then increased by 1.1 percent again after no more than 45 minutes and even reached an intra-day high of 7661 points. Shortly afterwards, the profits themselves became history and the DAX dropped to the level of the previous day. After all, there was only left a growth of 0.1 percent and a level of 7591 points.

The decision of the central bank was made as part of a generally positive development in the whole euro-zone. While the economy was still relatively weak at the beginning of the year, the head of the central bank, Mario Draghi, expects a general recovery within the next months. Further lowering of the base rate is not being expected by analysts therefore.
This may also effect the exchange rate of the euro against other currencies, especially the US dollar and the British pound. In the recent past, the euro had already strongly increased, on Friday though he lost about one percent against the dollar.

Future development remains uncertain

In the next weeks and months, there may still be very volatile price movements on the markets, especially in the whole euro-zone. There are several reasons for this and those being capable of analyzing them correctly, can absolutely get high returns with binary options. On the one hand, similar to Mario Draghi, most of the experts expect a positive development of the economy in the euro-zone. On the other hand, there are major uncertainties that may have an effect on the prices.

This includes the uncertain situation of the banks as well as the poor economic situation in Spain, one of the most important national economies in the euro-zone. Moreover, in February, a new parliament is going to be selected in Italy. The voters’ choice is still not certain though and is likely to effect the mood on the markets. Amongst others, Silvio Berlusconi’s comeback as a prime minister cannot be precluded.

Even in Germany where the economy lately was able to significantly increase, the growth expectations have been subdued a bit in the last months. The reason for this are especially the uncertain exports to the other countries of the euro-zone. Altogether, there are so many developments that binary option buyers should keep an eye on.