The markets have struggled for direction when it comes to the euro, and recent jumps higher have been met with periods of extended selling. With this week’s ECB meeting, and the continued pressure to put back the deadline for the end of QE (or to even add more QE), we could see some much-needed interest in the Eurozone, after a few months dominated by the Fed.
The Fed is still a factor in the ECB’s decisions, however. The fact that we have not had a rate hike is partly positive for Europe, as the delay means the discord between the central banks is not as wide as previously expected. But the reasons behind the Fed’s delay are also hurting the slow Eurozone recovery. Figures from China yesterday saw its GDP growth reading drop below the 7 per cent level, albeit to 6.9 per cent, and its continued slowdown and contagion into emerging markets are exactly what is causing the issues.
We will also have to pay close attention to earnings season. It is causing divergence between the state of equity indices and the state of their constituents. The major indices are likely to remain bullish as prospects for a rate hike are pushed back, yet more than half of companies reporting so far have missed expectations. This will worry investors: the bullish tone in equity markets may well be unsupported and therefore fragile should investors become spooked. With more earnings coming this week, we will be hoping that the divergence is reduced and bullish indices come alongside bullish stock reports.
ETORO INVESTMENT ANALYST
This week will be dominated by earnings posts by some of the huge tech firms, with Amazon, Alphabet (formerly Google) and Microsoft headlining.
With that in mind, we looked at the positions held across the eToro platform and found that 99 per cent of our users trading these huge stocks are long and expecting positive results.
It’s a key time of the year for a company such as Amazon, with the holiday season fast approaching. Therefore, investors will want to see some strong performances in various areas of the company, to put the firm in a strong position approaching this key quarter for the retail giants. Before we know it, it will be Black Friday and Cyber Monday once again.