European equities initially ticked higher after yesterday’s sell-off. However, this initially bullish move was short-lived as most markets dipped shortly after the opening bell, leading prices close to yesterday’s lows. Investors remain stuck between their appetite for risk and the blurry impact of coronavirus which is leading to mixed market sentiment this week. President Trump tried to reassure investors by saying the US economy was still sound, robust and not yet impacted by the deadly virus. These words were also underlined by NEC Director Kudlow who even said investors should “seriously considering buying the dip”. However, these words were not enough for most investors who are already fearing, if not a direct, at least an indirect impact on US imports/exports in the coming days or weeks.
In addition, traders are paying more and more attention to warnings from large international groups, especially after MasterCard and American Airlines both said their profit were getting hurt by the crisis.
European markets are mixed so far as the volatility remains high, but the directionality is still missing. The FTSE-MIB keeps on registering the eurozone’s worst performance while the French CAC-40 Index as well as the DAX-30 Index from Frankfurt are trading close to today’s opening prices. The most resilient index can be found in London as the FTSE-100 is trading slightly higher than yesterday. Investors’ sentiment towards UK shares may be boosted by the prospect of a UK-US trade deal after UK PM Johnson recently said trade talks with Washington could begin as early as the beginning of March. The market failed to clear the strong zone at 7200pts and is now trading around the 7150pts level, which is the first support before 7115pts. A clearing of the 7200pts zone could quickly lead prices close to 7255pts and 7300pts by extension.
