Stock traders hold their breath before the release of the Federal Reserve’s minutes tomorrow and could push prices lower in the meantime.
Sentiment has drastically changed during the last few weeks as data releases conflicted with Jerome Powell’s speech that followed the latest US interest rate hike.
Daniel Takieddine, CEO MENA at BDSwiss said, “As a result, stock markets in the US and Europe could record stronger volatility while traders try to determine which way monetary policy could be heading.
“Shifting sentiment could be the norm for the coming weeks before the US central bank meets again toward the end of March.
“Similar to their US counterparts, European stock markets were also under pressure despite improving economic conditions overall. Some large European companies were seeing strong earnings, contributing to building some optimism which could help alleviate to a certain extent potential negative effects from the minutes’ release.
“Positive earnings surprises in the US and Europe could also improve sentiment and help fuel risk appetite among investors.
Due to the large gains that were recorded during the last few months, European markets could be significantly more exposed to important price corrections if global sentiment deteriorates compared to their US counterparts.
“Otherwise, European indices could reach last year’s peak if sentiment improves.”