This week’s mixed tone towards European shares and to risk assets in general continues on Thursday. Even if the recent price action on most benchmarks reflected a calmer environment, volatility levels remain high. Investors are still digesting the wave of monetary responses from central banks and nations around the world to the impact of coronavirus and this has helped prevent markets from trading lower still, at least for the time being. The virus keeps on spreading worldwide with new daily cases registered in almost 85 countries with the state of California even triggering a state of emergency after it recorded 53 new confirmed cases. Despite actions being taken by most economic zones, market sentiment remains very fragile and downside risk still exists on most share markets.
Elsewhere, traders may expect a volatility surge on energy shares as uncertainty reigns on oil markets following the split decision between Russia and Saudi Arabia on possible deeper production cuts in response to the impact of the Chinese virus.
All the European benchmarks are trading slightly lower today with the worst performance coming from the FTSE-100 Index and the DAX-30 of Frankfurt. Both indices are showing a similar configuration (see attached chart) where the recent bearish trend is being interrupted by this week’s consolidation phase. Technically speaking, there is still no sign of a trend reversal as markets consolidate laterally without registering any new significant high.
