European stocks had a mixed opening on Thursday following a directionless trading session in Asia as Wednesday’s disappointing US retail sales continue to weigh on market sentiment. The first consumer spending decline in seven months is seen as a potential threat to the longest US expansion on record by investors and put further pressure on the US dollar. However, this could benefit stock markets as more disappointing data are likely to pave the way to a third straight rate cut from the Fed. Furthermore, the recent optimistic mood surrounding trade talks between Washington and Beijing is also being tempered as the truce remains fragile. Most traders may want to stay cautious regarding their exposure to stocks as markets are likely to stay volatile and trendless if no formal deal will be signed between the US and China.
In Europe, the trading wind changed once again this morning after the DUP in Northern Ireland confirmed it will not back the latest proposal on Brexit as there remains a lack of clarity on VAT and issues on customs. This put pressure on the Pound but had the opposite effect on the FTSE-100 index which has almost erased yesterday’s losses. The market is trading below the 7,200pts level at 7,175pts with the 7,185pts zone well defended by bear traders. A clearing of the 7,185pts intraday resistance level could extend the current rally to 7,210pts and 7,235pts by extension.
