European shares drifted significantly lower on Thursday, following the trend started at the end of the US trading session yesterday as investors switched to risk-off. The market euphoria of the past week is fading away as investor sentiment is now being weighed down by tougher restrictions, offsetting vaccine progress in many areas. Even if the long-term recovery isn’t really threatened yet, most investors expect a market correction due to mounting risk to economies from a very short-term perspective. Having said that, a bearish short-term correction would still be technically “healthy” for stocks as it would temper the powerful rally registered in November. Today’s session is likely to remain volatile as investors will keep their focus on major macro data (initial Jobless claims and existing home sales) as well as the EU summit. The Stoxx-50 Index has recently broken-out of a bearish rising wedge and can now find significant support at first 3,440pts, then 3,400pts and ultimately at 3,355pts.
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