Daily market commentary: European shares plunge

European Shares
European shares plunged on Thursday, erasing yesterday ’s gains, after the Federal Reserve disappointed investors yesterday evening. Jerome Powell dented market sentiment at the end of the US trading session yesterday, killing investors’ nascent optimism by announcing the Fed will to do whatever it takes to tame inflation. Of course, the record 75bp rate hike decision isn’t helping Credit and Stock markets trading higher today, but most of the current sell-off seems to be coming from major worries that the Fed is willing to accept worsening economic conditions, in the shape of an upcoming recession alongside higher unemployment (like four decades ago), in its fight against the pressure brought by rising prices. Doubts regarding monetary policies are growing bigger in investors ‘minds, and there is a high chance the bearish trend will deepen on stocks, unless the Fed manages to bring more stability to Bond markets, which doesn’t seem to be in the pipeline so far. European stock investors are, however, in a different scenario as they patiently wait for the ECB’s “new tool” to keep stability in Treasuries and shield weaker EU nations from higher borrowing costs, which is perceived as a positive news so far. Meanwhile, Eurozone stocks are being dragged down by US markets as the STOXX-50 index now trades back below the 3,500.0pts level, with the 3,425.0pts/3,380.0pts zone in sight.

Pierre Veyret– Technical analyst, ActivTrades

Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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