European equities held gains on Friday as risk appetite remains high ahead of the start of the earnings season.
Stock benchmarks are on track to record their best week since March, with most markets trading near their yearly highs after the latest US inflation data raised expectations of an impending end to the current monetary tightening by central banks.
Investors remain optimistic for now, as hopes, bets, and rumours impact their trading mindset more than lingering macro uncertainties and geopolitical tensions.
However, attention is turning towards corporate profits as the Q2 earnings season kicks off today.
Investors will cautiously monitor the first batch of results from the financial sector with reports from BlackRock, Citigroup, JPMorgan & Chase and Wells Fargo & Co.
So far, corporate results have been mostly positive since the beginning of the tightening cycle by both the Federal Reserve and the European Central Bank, acting as a strong bullish catalyst for stock investors. This sentiment is likely to continue further if company results for Q2 keep on beating estimates. However, the mood may dramatically change towards riskier assets if this earning season was to disappoint investors, especially now that we notice more signs of slower growth in many regions.
Pierre Veyret– Technical analyst, ActivTrades
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