European indices had a rough time in the market for the first trading day of the second quarter, and for good reason. Economic uncertainty in Europe and the UK are leading to the declines. Today, we’ll talk about what’s causing that economic uncertainty, why indices are feeling the pain, and what binary options traders should be watching for ahead.
What’s Causing The Uncertainty In The European Market
Chances are that if you’ve been following financial news as of late, you already know the answer. The uncertainty in the European market is being caused by the Brexit. For those of you who haven’t followed the story, it’s time to start watching it closely. Here’s what’s going on…
- The Vote – Last year, the British consumers voted for the UK to leave the European Union. While this vote did come in positively for those who supported the Brexit, there was quite a bit of debate with regard to whether or not the action would actually take place. Essentially, we saw various articles explaining various ways that the Brexit could be stopped. However, as you’ll learn in the next bullet, those efforts by those who did not support the Brexit proved to be less than fruitful.
- The Brexit – As mentioned above, while the British consumers voted for the Brexit last year, there was quite a bit of skepticism with regard to whether or not the move would actually take place. However, that skepticism no longer exist. The Brexit is not only going to happen, it is currently underway. In fact, last week, the UK officially triggered Article 50, putting Brexit negotiations in place.
Why Is This Leading To A Landslide In The European Market?
The answer can be summed up in one word, uncertainty. At the end of the day, the Brexit is a massive economic development, under which a very large economic region that has been supportive of the EU for some time is making the decision to leave. To make matters worse, nothing like this has ever happened before. Without any historical reference, there’s no telling just how this move will affect the European economy.
As most expert investors know, uncertainty is the worst enemy of the market. When investors aren’t pretty sure that assets are going to rise in value, they tend to divest, causing those assets to fall in value. With uncertainty circling around the European economy at the moment, business sentiment is proving to be a concern, causing the values of European stocks to fall and bringing indices down with them.
What Binary Options Traders Should Be Watching For Ahead
Moving forward, European indices are likely to present several opportunities for binary options traders given the circumstances in the European economy at the moment. However, if you want to turn these opportunities into profits, you’ll need to stay on top of the news. In particular, keep a close eye on news surrounding the Brexit. Because this is the source of the uncertainty that’s currently hitting the European market, any news surrounding the topic will likely lead to wide-sweeping movements in European indices.
What Do You Think?
Where do you think European indices are headed moving forward? Join the discussion in the comments below!