EUROPEAN SHARES
Shares opened mostly higher in Europe on Thursday, following a rather positive trading session in Asia overnight, as the “risk-off” stance takes a break.
European benchmarks rebounded, led higher by producer manufacturing, consumer durables, and financial stocks, ending, at least temporarily, the biggest losing streak of the year.
However, the lack of significant geopolitical or monetary improvements makes us believe today’s price action may be a technical correction rather than a bullish reversal.
Indeed, these positive moves on global stocks come as the sell-off in treasury markets halts and the USD takes a break from its bullish trend, easing some of the pressure on riskier assets.
These moves may come from profit-taking / short-sell buybacks, which could mean the bearish trend could resume soon for equity markets.
Even if a lateral consolidation could still take place in the short term, as long as traders are pricing in a “higher for longer” monetary narrative, a bullish trend resurgence won’t be the most likely scenario for stocks.
In fact, there is a potential for an even deeper correction if investors become more concerned about the monetary, geopolitical, and corporate spheres.
The STOXX-50 index still trades inside its 60-point consolidation between 4,900pts and 4,965pts.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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