Markets in Europe were taking their cues from Wall Street on Tuesday as the heavy tech-led sell-off started to recede. Data backed up the generally skittish attitude in markets. German ZEW economic sentiment dropped to its lowest since September 2016. The ZEW readings typically correlate strongly with the DAX index. A measurable improvement in sentiment will probably only arrive at the time of new record highs for the DAX. Something that does not look on the cards for now.
Investors are still waiting for a response from Facebook (NASDAQ:FB) CEO Mark Zuckerbeg, who has been called on by politicians to testify on the data scandal engulfing his company. The silence speaks volumes and we suspect Facebook are preparing a robust response. The near-term risk is that Zuckerberg overreacts with new data protection measures that hinder the very profitable monetisation of its vast user base. Looking further out, legal action and greater industry regulation are huge headwinds ‘the Zuck’ has to contend with. The tech giant’s fast-and-loose handing of private data will feed the niggling doubt investors have had all along that the big US tech stocks cannot keep going up so rapidly forever.