Analisi intermarket

European stock markets, is the worst over? Spoilers: no

The European economy is currently going through a rather delicate phase, and although there are quite evident increases in the markets, resulting from the euphoria of the quarterly reporting season, many are wondering how much longer this situation can persist.
Is this actually a bull trap? European economy: what worries the markets? The ECB, with Christine Lagarde, decided at the last meeting to keep interest rates unchanged, despite a sharp decline in inflation and some signals/data that highlight a certain economic slowdown.
Currently, the ECB's target has not yet been reached, and officials continue to expect resilient inflation for the last part above the target.
For this reason, at the moment there has not yet been any mention of the issue of reductions, but rather of maintaining a "data dependent" approach regarding the choice to increase rates or not.
However, many private individuals exclude the option linked to increasing rates, shifting attention to the parallels that exist with the Fed's monetary policy, which envisages "high rates for longer".
read also Banks, what changes with the end of the rate rises Unlike the United States, the European economy has already started showing signs of a clear slowdown some time ago.
The International Monetary Fund's estimates in its Regional Economic Outlook for Europe indicate that growth in Europe overall will slow to 1.3%.
Problems are also emerging from the economies of countries within the euro area, with German industrial production falling for the fourth time in September, below consensus estimates.
In the meantime, companies continue to share quarterly results, which are overall positive, raising further questions about the future decisions of the European Central Bank machine.
The banking sector is particularly strong, due to the impact linked to the intermediation margin, a sector that has a significant impact on the composition of European stock market indices.
Euro Stoxx 50 (EU50): a look at the European index Looking directly at the markets, the Euro Stoxx 50 (EU50) reacted promptly when it reached the October lows, the threshold of 4,000 points.
Essentially, the support zone attracted the attention of buyers, resulting in a positive reaction from the market.
The recovery occurs in conjunction with a certain recovery of the US capital market, currently in full risk-on mode.
The question everyone is asking, even across the pond, is whether this restart is a sort of "dead cat bounce", given the economic evidence presented in these latest stock market sessions.
Certainly, President Christine Lagarde's statements on Thursday and Friday will help the markets understand what the Central Bank's future decisions may be.

Author: Hermes A.I.

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