European stocks drifted lower on Thursday, alongside US Futures, as market sentiment gets hustled. Yesterday’s Fed announcement on a no interest rate hike environment for the rest of the year combined with its current bond buying program had little impact on the market. Indeed, most of these measures were already priced in by bull traders, who used this leverage to drive stock prices higher in the recent days, making this week likely to be a consolidation phase. However, if some investors were expecting a less directional market this week, with most of them betting on a global recovery, they did not really see a new virus wave coming. Jumps in new daily cases were spotted in some of the US states like Texas and immediately sparked concerns of a potential second round of infection in the country, inevitably impacting market sentiment towards riskier assets. Of course, there must be many more signs of a potential second wave before this scenario becomes a real possibility by traders.
The technical situation on EU stocks no longer looks positive. The DAX-30 Index is one of the worst performers, trading below 12,200pts this morning. The bullish channel has now been invalidated with both the moving average registering a bearish reversal as well as the RSI indicator falling back below its 50% line into the selling zone. The next major support for the market is in the range between 11,880-12,000pts while an intermediary one can still be found above 12,115pts on a very short-term basis.
