Pre-Market: Stocks Drop Again as Europe Slows and BOE Holds Rates Steady

It’s been a data-heavy European session following yesterday’s Fed decision, as manufacturing and services PMIs came out across the Old Continent, with the British retail sales report and the Bank of England’s monetary meeting thrown in the mix too.

FTSE 100 Index, 4-Hour Chart Analysis

The bearish technical setup in global markets provided the background, and as the PMIs mostly signaled a slowdown in economic activity in Europe, with especially the manufacturing surveys missing the consensus estimates, the Euro pulled back from yesterday’s highs while stocks remained under pressure across the board.

DAX Index, 4-Hour Chart Analysis

European equity markets continue to look wounded, and British stocks are especially weak amid the Pound’s rally. Although today the BOE kept its benchmark rate unchanged, despite the rate hike rumors, the vote was divided (2 members out of 9 voted for a hike), and that didn’t help the struggling FTSE index with the EUR/GBP pair trading on a 9-month low, even as retail sales came in better than expected.

EUR/GBP, 4-Hour Chart Analysis

US Stock Futures Also Down in the Aftermath of the Rate Hike

Nasdaq 100 Futures, 4-Hour Chart Analysis

The Nasdaq, which has been leading the bounce off the February lows, is back below the key 6850 level after losing its relative strength lately. Buyers should show up soon, otherwise, another batch of trend following strategies will switch to bearish, which could lead to new lows even in the previously strong tech benchmark, not just the laggards.

Yesterday’s post-Fed chaos turned into a clear risk-off environment today, with the Japanese Yen and gold rallying and risk assets getting dumped across the board. Long-dated Treasury yields are falling sharply today, despite the promised hawkish stance from the Fed after 2018, and although shorter rates are also rising somewhat, that doesn’t seem to help equities at this point.

Today’s US session could be a wild one, given the large overnight moves, with plenty of opportunities for day traders, and for now, a clearly bearish bias. That said, violent snapback rallies are always in the cards, but the overall setup clearly points to more downside in stocks globally.

Featured image from Shutterstock            

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

Leave a Reply