Market Uncertainty Deepens in Europe as Stocks Extend Losses

Stocks extended losses for a third day in Europe on Thursday amid rising uncertainty ahead of key macro data.
Risk appetite continued to fall after the downgrade of the US credit rating combined with the latest batch of mixed earnings reports sparked economic worries. Investors have seized the opportunity to limit their exposure to stocks while waiting for more bullish market drivers ahead of key macro data from the US and Europe.
While all eyes are likely to be on tomorrow's highly awaited US NFP, the focus of investors today is likely to be on the Bank of England's rate decision. While a 25 basis point rate increase is widely expected, there is still some speculation about the possibility of a more hawkish stance in the form of a 50 basis point rate hike, which has weighed on market sentiment.
Traders will closely scrutinise the speech of BoE Governor Bailey to glean insights into the outlook for interest rates and bond sales for the rest of 2023. While there is already speculation about a continuing hawkish stance due to stubbornly high UK inflation, investors remain cautious and await further clarity from the central bank.
The FTSE-100 index is currently testing its 50% Fibonacci retracement at 7,474.0pts, in a sharp bearish price action since the appetite for stocks fell everywhere, and we expect market volatility to increase further with today's and tomorrow's macro announcements.

Pierre Veyret– Technical analyst, ActivTrades