EUROPEAN SHARES
Equity markets dropped globally on Friday as fear trading dominated ahead of the crucial US job report. There has been a sell-off across many sectors, with tech shares registering the worst performances after investors digested the latest poor earnings reports from Intel, Amazon and Apple. However, corporate results are only the tip of the iceberg. Indeed, many investors are losing confidence after the Fed held interest rates unchanged during the latest FOMC meeting earlier this week.
The latest batch of disappointing macro data, especially on the employment front, is spreading the sentiment that the Federal Reserve may be behind the curve with its monetary policy. As usual, whenever uncertainty rises and confidence drops, investors tend to reduce their exposure to riskier assets and seek safety, which explains the current stock sell-off and increased appetite for treasuries.
Volatility is likely to remain high today as investors wait for the US NFP data, hoping it will provide more clarity on the employment sector of the top economy in the world. If the US NFP and unemployment data confirm a tighter situation, this would likely support the idea that the Fed may be late with the start of its monetary easing cycle, which could fuel the current equity sell-off further.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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