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European stocks edged higher at the opening bell on Thursday after an overnight rebound for the dollar ahead of a rate decision by European Central Bank (ECB).

Investors will closely watch for the most awaited January rate decision by ECB at 12:45 GMT with Mario Draghi’s press conference following 45 minutes later in Frankfurt.

Although the Bank’s key lending rates and quantitative easing program are likely to remain unchanged, market participants are still expected to focus on Draghi’s assessment over Eurozone’s improved growth and inflation dynamics for any anticipated move in the next months.   

Pearson Expects European Stocks to Fall

European stocks declined yesterday as investors remained worried after Pearson decided to downgrade its profit forecast, which added the likelihood of a weaker earnings outlook as the reporting season begun.

Meanwhile, the Stoxx Europe 600 Index dipped around 0.2pc in London, fueled by dropping banks sectors and media companies, which have lost about 0.6pc. Despite Pearson’s losses of 31pc, the FTSE 100 remained steady.  

Analysts believe that FTSE 100 had driven Wednesday’s gains, with an 8 point rise at the opening session, along with advances for Germany’s DAX and the CAC-40 in Paris.    

The Stoxx Basic Resources index was down 0.4pc after posting 62pc gains in 2016, which then made its way as the best-performing index among 19 sectors.

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Pearson is "just in a difficult kind of business. Publishing in general is suffering at the hands of the internet and I think they're struggling to come up with a solution", said Jasper Lawler, senior market analyst.

"Our argument has been, and remains, investors have no visibility on what this company looks like in five years," analyst Gary Paulin said in a note.

Based on the recent reports, Goldman Sachs is set to cut its London Workforce in half after Brexit.

According to two of the largest banks in Europe, about 1,000 jobs could be slashed off in London as they prefer for an expected interference brought by Britain’s exit from the European Union (EU).      

With Britain’s exit from the EU, out of 5,000 Swiss bank employees, 1,000  could be affected by Brexit, UBS Chairman Axel Weber said. Additionally, HSBC Chief Executive Stuart Gulliver mentioned that there will be a relocation of employees responsible for generating around a fifth of its UK-based trading revenue to Paris.     

The chart below illustrates Goldman Sachs response to Britain’s exit from the European Union, along with decisions of laying off their employees to prevent bank disruptions.

There is no confirmation trend as of writing, but stock prices were seen in a bearish tone, which previously traded in a heavy trading volume on January 17th. The stock price tried to break down at support 238.60, signaling a downside bias.

Further, the stock is currently testing support 233.01 in a light trading volume, but still no confirmation of a downward trend. The RSI stood at 46.4646, which is slightly away from the oversold level.   

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Conclusion

Given the expected disruptions brought by Brexit, markets are now seen reacting, but banks are mostly affected by the move.

So far, it could signal a bearish tone if the stock price will position below its resistance level. However, even if it will break down, there is still no confirmation of a trend. Hence, investors could close any buying positions before the markets become wobbly.

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