European markets slid lower on Wednesday, following the trend registered overnight by Asian benchmarks albeit on lower volumes than usual. Today’s uncertain market sentiment comes after investors started to digest the first few earnings reports with the financial sector publishing mixed results on Tuesday. This blurry picture is making it hard for traders to properly evaluate the impact of COVID-19 to companies with investors preferring to limit their exposure to riskier assets like shares. While many governments are working towards ending lockdown measures, investors are more attentive to the time schedule with which companies may return to catch up with profits. The recent announcement from President Trump about a possible re-opening of the US economy in May didn’t boost market sentiment as most investors are more focused on profitability and fear a premature reopening of economies could bring severe damage in the long run. Markets are likely to remain volatile today as the release of the latest figures on US crude oil inventories and US retail sales are looming in addition to earnings from Citigroup, Bank of America, Goldman Sachs and Morgan Stanley.
The Euro Stoxx-50 Index is trading significantly lower so far with the market pulled down by the energy and industrial sectors ahead of this afternoon’s data releases. The market is registering a pull-back over its double support zone near 2,880pts (38.2% Fibonacci + Tenkan line). The bullish trend remains valid so far and fresh highs are still technically possible but a break-out below 2,880pts would extend the bearish correction around 2,790pts (Kijun-line) on a short-term basis.
