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- European markets with a positive attitude, but not for long.
European markets with a positive attitude, but not for long.
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Loading...Despite the positive data from Europe indices of the old continent lag before those of US and Britain.
Risks in Europe about the EU, strong regulation problems around the euro zone, weak data, falling competitiveness are the reasons for the poor performance of European stock indices.
The program of quantitative easing by the ECB to stimulate the stock market, but inflation on the old continent is still o too low to be able to say that there is light in the tunnel. The rise in the dollar and oil also helped for the economic activity, but it has already accumulated in stock prices.
What awaits us on the horizon:
1st. Important elections in Europe. In the month of April elections in France and in September in Germany. At the moment it will worry the markets because French anti European parties are gaining ground, which may be detrimental to the EU, thus new risks and new speculative sentiment against Europe. In Germany, Merkel loses force that can bring to the forefront the Social Democrats. Germany was considered until now as the guardian of the euro zone because of its tight fiscal policy. What if there is a new social democratic government - here too there are many risks.
2nd. ECB may start reducing its program of buying government and corporate bonds, which at first may affect negatively the stock market. Then with a little action the ECB looks can once again focus on troubled countries with large debt such as Italy, France, Portugal and others.
3rd. The risk of any customs fees from the US will also have a negative impact on the market in Europe.
Of course there is good news for the markets.
The last 3 quarters showed an increase in economic activity in most EU countries with a rate above 2%. We can say that there is already positive economic trend in the EU.
A trend that will likely continue into early 2017. Good data will provide short-term support to the stock market, it is not excluded in determining moments with approaching elections in Europe to see corrective moves.
Other stock indexes in the US and Britain are on a new record levels, a correction will also have a negative impact on the market in Europe.
The short-term sentiment may remain positive, but the next month could see strong speculative sentiment in France and a number of risks to the market.
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