European stocks are edging higher, alongside U.S. Futures, following a string of good corporate reports. However, these bullish moves on stocks haven’t been registered with significant transaction volumes and no strong technical levels have been cleared yet, making the current very short-term trend a potential “pull-back” before the storm.
Even if Monday showed the biggest one-day drop in global stocks since February 2018, several bearish leverages may indicate the slide is not over yet. Fears of escalating tensions between the U.S. and China linger after Beijing denied U.S. accusation of market manipulation as the nation said the new Yuan rate was decided by the market, not the government. Meanwhile, movements on other asset classes also clearly indicate investors’ lack of interest on stocks as they shifted their focus to other markets like currencies following the surprising decision on rate from the RBNZ and speculations towards the next move on monetary policy from the Reserve Bank of Australia.
Elsewhere, investors will also pay attention to policy maker Charles Evans’ speech (Chicago FED) in the afternoon as they are looking for clues on the FED’s next move. Markets have entered a consolidation phase in Europe, the Stoxx-50 index is heading back towards the 3,330.0pts level and the DAX-30 index is struggling to clear the 11,700.0pts level which could open the way to 11,735.0pts shortly. An increasing market volatility may be observed in the afternoon as investors await U.S. data on crude oil inventories, which could also have a strong impact on stocks.