European markets drifted lower on Wednesday, alongside US Futures and following a mixed trading session in Asia overnight as rising uncertainty drove market sentiment down. Today’s uncertainty comes from both the new world and the old continent and has put a significant pressure on automakers and banking shares. Investors have first been disappointed by Joe Biden’s words about China after he said he will not remove the tariffs immediately, which spurred concerns over the future of the US-Sino trade relationship. In addition, Brexit talks added to this uncertainty after investors witnessed the possibility of a “no-deal” Brexit following Michel Barnier’s latest comments. Even if no sharp downside price action has yet been seen on European benchmarks, both market volatility and directionality have faded significantly over the past few days, as investors take a break as they wait for clearer clues on where global economies are going.
That said, there remains a good chance that markets will achieve fresh highs as soon as the current short-term uncertainty lifts. The Stoxx-50 Index is still trading sideways between the strong 3,475-3,500pts level and the first available resistance at 3,535pts.
