EUROPEAN SHARES
Global equity benchmarks continued to fall on Friday as investors bet on more monetary tightening ahead of today’s crucial US NFP report.
The Stoxx-50 index followed the bearish price action registered overnight in Asia, while US future contracts also point to a lower open as investors seek safety amid rising uncertainty.
Decreased transaction volumes due to the summer period combined with risks the lingering aggressive stances from central banks are posing to growth and corporate profits, make the overall environment very discouraging for stock traders.
The fight against inflation is seen as far from over after many Fed and ECB officials confirmed “there was still work to do” and that rates will need to remain “higher for longer”, putting more pressure on market sentiment towards riskier assets.
There are increasingly more reasons to be cautious rather than keep buying benchmarks already hovering around significant resistances.
Of course, all eyes are now on today’s US Unemployment rate and NFP report in search of more hints about the Fed’s next monetary move.
Paradoxically, stronger data than expected should give more room for the Fed to go forward with its tightening campaign, while poor data should raise dovish hopes and ease some of the pressure seen on equities.
The STOXX-50 index is trading below the significant 4,230.0pts / 4,220.0pts zone, a level previously seen at the end of March. The next support areas can be located towards 4,185.0pts and 4,145.0pts, the last ones before the 4,000.0pts mark.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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