Bullish sentiment remains fragile for equity markets
Share markets drifted slightly lower, from Chinese and Japanese stocks to US futures on the S&P500, for the last trading session of the week as investors digest mixed macro news.
This decreased appetite for risk comes after investors witnessed disappointing earnings from the tech sector, with Amazon in focus, as well as mixed key macro data in the US yesterday.
This situation can also be seen on the old continent as most benchmarks are correcting this week’s rally following the ECB announcement of a 75bp rate hike, as anticipated by most investors who seized the occasion brought by the news to take some profits out, after a solid week for stocks.
Bullish sentiment remains fragile for equity markets, and all eyes are now likely to be put towards the next FOMC meeting next week, where investors still expect another jumbo-size 75bp rate hike but also, and especially, hints of a peak in the current aggressive monetary stance. With so many investors already buying the rumour, a sharp sell-off on stocks could come as a real threat next week if the Fed doesn’t deliver what investors have been pricing in so far.
Meanwhile, corporate results are likely to continue driving sentiment for stocks, with today’s reports from Safran, Sanofi, and Airbus in Europe alongside Exxon Mobil and Chevron in the US.
Pierre Veyret– Technical analyst, ActivTrades
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