Equities are drifting lower almost everywhere around the globe today as investors fear a geopolitical escalation ahead of the G-20 summit. The recent bearish leverage coming from the U.S. / Iran dispute continue to weigh on assets perceived as riskier after President Trump implemented a new set of major sanctions on Iran on Monday evening. Investors were not reassured by Tehran’s reply as the government said it will not engage in any talks with Washington as long as these sanctions are in place. In addition, investors are also worried by a possible intervention of Russia after the nation’s deputy foreign minister said the government and its allies will counteract U.S. sanctions on Iran, escalating the dispute further.
For now, the mood on markets has turned more prudential as investors look for safer assets like gold, the Swiss Franc and the Japanese Yen to weather volatility spikes on stocks. Equities are likely to be volatile and not very directional prior to the next G-20 as investors await more details on the evolution of trade dispute with China to decide whether to increase their exposure to this market or not.
The Stoxx-600 index is trading lower, like every benchmarks of the old continent, with all sectors down. However, the 3,425.0pts price level on the Stoxx-50 index as well as 12,200/12,205.0pts zone on the DAX-30 are well defended by bulls, meaning the current bullish trend may not be over.