European benchmarks opened lower following the bearish trend

European benchmarks opened lower following the bearish trend sparked at the end of the US trading session yesterday but quickly bounced back as bull traders defended support levels.
Fed Chairman Jerome Powell’s warning that borrowing rates may not be at “restrictive enough” levels surprised investors yesterday, stalling the rally in equities and treasuries while sending the US dollar higher.

This sudden hawkish tone contrasts with the dovish hints provided during the last FOMC meeting, leaving investors with a blurry feeling about the outlook on monetary policies.
However, since the European opening bell, bull traders seem powerful enough to prevent the market from dipping much deeper, successfully defending the 4,195.0pts/4,200.0pts zone on the STOXX-50.

Investors are likely to now wait for clear direction and action from central banks rather than relying on rumours and semantics. That said, equity markets may consolidate in a lower volatility environment as investors will wait for next week’s data (US/EU/UK CPI) before bringing significant adjustments to their risk exposure.

Pierre Veyret – Technical analyst, ActivTrades