EUROPEAN SHARES 

European shares drifted lower on Thursday alongside Asian equities and US Futures on the S&P 500 as market sentiment slowly fades. Investors, who were already sceptical about further gains on stocks, have seen their risk appetite slashed by yesterday’s comments from Jerome Powell.

The Fed chairman added to the current uncertainty by warning investors about the lasting damage to the economy caused by the coronavirus pandemic, and the fallout could worsen if no additional stimulus support is provided. The market optimism between the end of March and early May has now vanished and led markets to fresh lows for the first time since the beginning of the April rally. This is seen as a threatening situation to markets as the short to mid-term bullish trend is now over and traders wonder if prices will enter into a horizontal consolidation phase or start a new corrective move that could lead to much lower lows.

Investors will need fresh bullish leverages, like reassuring macro data or encouraging numbers on the virus front to send prices higher and restart the rally. Having said that, we expect volatility to rise towards the end of the week as investors cautiously monitor the latest significant data with today’s US jobless claims and tomorrow’s much anticipated retail sales and industrial production from China.

Pierre Veyret– Technical analyst, ActivTrades

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