European stocks slip from record highs ahead of earnings season.

As investors booked profits ahead of the semi-annual earnings season, European and French stocks fell from all-time highs. At the same time, a merger between two French monopolies rose following months of wrangling.

After the two waste management companies agreed to a merger deal worth nearly 13 billion euros ($15.4 billion), Veolia and Suez shares soared 9.7% and 7.7%, respectively.

Technology, travel and leisure stocks, and commodity stocks led to declines for the benchmark pan-European STOXX 600 index, which closed 0.5% below Friday’s record high Friday.

A closer look at upcoming economic data and first-quarter results could justify Wall Street’s sky-high valuations. [MKTS/GLOB]

Analysts expect Europe’s first-quarter earnings to jump 47.4%, according to Refinitiv IBES data. Consumer cyclical and industrial firms are likely to provide a significant percentage of support.

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Markets Weekend Review

The equities market ended lower on Friday to close out an otherwise down week for the market. The takeaways for investors are that Friday’s business closed below the crucial 30-day moving average serving as support. A close below this level could indicate a change in near-term trend, and that could mean further losses in the days and weeks to come.

This week investors should be on the lookout for a host of economic data, including the all-important non-farm payrolls report. Labour-related data points released during the month imply that only little changed labour conditions during the month, but there could be some big surprises in the data. Other data points that could move the market this week cover the ISM reports on Manufacturing and Services and the Construction Spending and Factory Orders data.

Stock futures rise in response to a bond rally.

As investors await signals from Federal Reserve officials on whether the central bank will take action against the tumultuous bond market, major indexes are self-assured to accelerate their gains.
MARKETS
With bond yields declining, the Dow Jones rose 2%, heading for its biggest gain in nearly four months.
Raising rates last week increased concerns about inflation and rich equity valuations.
Additionally, the manufacturing activity indicator revealed that the economy is starting to pick up speed.
Several hours before the opening bell, stock futures were already pointing upwards. Wall Street is hoping to bounce back this week after a down week last week.
The QQQ, RUT, and SPX all have insulation at key percentage levels.

Potential $SPX support levels coming into play early in today’s session.

Such observations, particularly as it pertains to VIX behaviour, were timely on the heels of Thursday’s 35% rise in the VIX. Amid this volatility spike, the SPX fell sharply to a new low, and for the second time in less than a month, it touched it’s three-month channel’s bottom. The SPX’s end-of-month pullback mirrors the late-January sell-off, as is evident from the chart below.