Negative sentiment before the start of European trading

After the negative session in the United States, Asian traders hurried and did the same during the night. The banking sector in Asia has been hit hard by the negative sentiment, and this sentiment is being transferred to Europe, where major stock indices will open with declines.

Indicative levels of opening up European stock indices:
UKX: 6,650 -29 points
DAX: 10,612 -44 points
CAC: 4,699 -19 points

The reason for these sell-outs was the US central bank, Fed, raising the country's key interest rate (broadly expected event) by 25 basis points to 2.50%. But although this was forecasted by analysts in September, the news did not fail to disappoint the markets. Traders seem to have agreed that they do not like what the Fed heard during their final meeting for the year, but exactly what they did not agree remained less clear. Shares collapsed and bonds rose, as the central bank resisted the pressure not to raise interest rates, while investors were given the task of unraveling what they expected in 2019. Bankers also showed optimism towards their economic outlook, even reducing expectations for future increases in rates. Observers gave several possible explanations for the risk-off response to the markets

In today's session, I expect increased sales to the banking sector, which will be under the most pressure from the events that have elapsed in recent hours.

It is still too early to talk about bearish trends or stick labels like recession, but low indices do not in any way talk about good purchasing levels. Since October, "buy the dip" does not work, so it's best to wait for a secure price action signal, both technically and fundamentally, before opening a new position in any direction.

Sometimes in the trade, the best action is the lack of such, and in this case it is more than ever.

Photo: pixabay.com

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