The first trading session of August opened with a mixed trading stance for European contracts, mirroring the trend seen overnight on Asian markets. Increasing coronavirus cases in the US, Latin American and BRIC countries mixed with growing fears of a second wave in Europe continue to be worrisome for investors as it could seriously stall the economic recovery. In addition, President Trump’s recent threat to Chinese-owned software companies in the US further escalated tensions with Beijing, which inevitably weigh on market sentiment today.
Technically speaking, the current lateral market consolidation on stocks is not yet threatening the mid-term bullish trend yet as prices have not broken any significant support zone, despite the correction. The upside risk remains alive, but investors will need further fiscal and monetary support from lawmakers and central banks in order to sustain risk appetite in the near term. Having said that, most market operators are likely to be particularly attentive to today’s speeches from Presidents of the Federal Reserves of St. Louis, Chicago, and Richmond, to get more clues on the Fed’s next move.
