European equity markets are gaining momentum, and we currently see the DAX opening 0.4 per cent higher on the day. On Wall Street, traders will return today from a three-day holiday weekend and market sentiment remains positive despite the recent sell-off driven by tech stocks.
Given the dizzying rally that some of the largest tech stocks have enjoyed recently, it is no surprise that volatility has increased, and it does not take a lot to unnerve investors. Nevertheless, some market participants welcomed the recent decline as a healthy correction.
European Central Bank (ECB)
In Europe, investors are anticipating that the European Central Bank (ECB) will leave rates unchanged on Thursday, but keep the door open for further measures.
At the same time, it is expected that ECB President Lagarde will address the strong Euro. While verbal intervention will not be enough to reverse the currency´s recent gains, it could at least stop the rally and put a lid on the psychologically important 1.20 level.
This could prop up European markets, which have lagged behind their American counterparts in recent months.
Meanwhile, the Brexit chaos is back on the radar.
UK Prime Minister Johnson warned that he is willing to walk away from talks with the EU and set a mid-October deadline for a deal to be reached.
The EU responded by saying that the UK needs to keep its promises. Markets are concerned about the rising chances of a no-deal scenario, and pressure on the British Pound is likely to increase in the near-term.
The currency has mainly benefited from the broad US dollar weakness, but could quickly reverse those gains if the negotiations fail to progress.