EUROPEAN SHARES
Following the global sell-off, European stocks continued to drop, as fear trading dominated after the earning season’s disappointing start and hints of softer consumer demand in the US. Selling pressure keeps deepening on riskier assets after key sectors - US tech and EU luxury shares - have frustrated investors by not delivering the figures and short-term outlook they previously anticipated.
This sentiment has also been exacerbated by yesterday’s US industrial PMI and new home sales data falling short of expectations, leading to a cautious stance regarding consumer demand in the world economy. After such a strong market rally in the first semester of 2024, it is only natural to see investors taking out some profit and proceeding with a temporary reassessment of their risk exposure in the light of the recent disappointing developments, especially during the summer period where most investors tend to take a break.
However, the question now is: is it a dip buying opportunity or the beginning of something bigger? The answer will likely be provided shortly as the earnings season continues to roll, with more results from big US tech companies like Microsoft, Meta Platforms, Amazon, and Apple due next week. On the macro front, investors have started to brace for tomorrow’s key US PCE Price Index, a crucial data for the Fed’s monetary policy design.
Meanwhile, investors will also wait for today’s US GDP and jobless claims figures, following this morning’s disappointing batch of data from Germany. Volatility should remain high on most benchmarks through the end of the month, as the STOXX-50 index already broke a key mid-term support level, with prices now trading below the 4,800pts mark.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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