European stock markets opened mixed before drifting lower in early trading, with a move led by Health Care and Utility shares. The current mood is not confined to EU stocks as similar price action has also been noticed in Asia overnight as well as on US Futures. This lack of volatility can be explained by a predominant “stand-by” trading attitude as everybody awaits the next key central banks meetings in the coming days (ECB on Thursday / BoE and FED next week). The current low market volatility may then be the “calm before the storm” as investors wait for more clues on monetary policy before adjusting their exposure.
Photo by Emmanuel Appiah.
While a rate cut from the FED is now already fully priced in by the market, investors are wondering how dovish the ECB will be this week and whether it will proceed with a rate cut or new quantitative easing. This “wait and see” mood is also underlined by the low amount of fresh news surrounding the US-China trade war. Despite “a lot of progress” recently registered between the two blocs, according to US Secretary of Treasury Steven Mnuchin, traders prefer to wait for the highly anticipated October round of talks before taking action.
In Europe, the worst performance is that of the UK FTSE-100 index, pressured by the Pound Sterling holding on to Monday’s gains after the Parliament renewed its rejection to a snap election. The market found support over the 7,200.0pts zone but remains capped by the 7,245.0pts resistance. A break-out of the 7,200.0pts price level could drive the market down towards 7,150.0pts on a short-term basis.
