20 days ago • Posted by Paul de La Baume

#Stoxx50 slips ahead of #ECB. #markets #centralbanks #trading #EUR #EURUSD

European equities dropped to the lowest in a week over fears the steps the ECB will take to reign in inflation could pressure valuations. The central bank is expected to end bond purchases this month and hike once in July and again in September, lifting the deposit rate from minus 0.5% to zero. European stocks may however be able to digest the ECB meeting positively if the central bank doesn't adopt a too hawkish tone. If global growth perspectives improve, investors could also see European stocks as an attractive opportunity, based on historical valuations. On that note, analysts see a 36% upside for European tech stocks over the next 12 months, although some of the earnings guidance may need to be revised down. One beneficiary of a hawkish ECB could be the EUR, which could reclaim some of its lost ground against the USD.