After a mixed open, European stock markets turned positive as risk sentiment started to improve gradually following a sell-off witnessed during the Asian session. Corrective trends were seen amid the reports that, according to British Prime Minister Boris Johnson, Brexit talks were in a “serious situation” and a deal was unlikely unless the EU is willing to alter its position on fisheries. Earlier, European Commission President Ursula von der Leyen noted that reaching an accord would now be very challenging with two weeks remaining until the U.K. exits the EU.
Elsewhere, the Bank of Japan announced a six-month extension of its special program amid the coronavirus pandemic. Meanwhile, the United States threatened to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to a trade blacklist on Friday.
On the positive side, the US authorities said they were close to an agreement that would supply $900 billion in additional aid, while the FDA approved Moderna’s coronavirus vaccine for emergency use.
As for the data, U.K. consumer confidence from market research firm GfK jumped to -26 from -33, making its sharpest climb in eight years in December. In Germany, the headline German IFO business climate index came in at 92.1 in December, stronger than the consensus estimates pointing to a reading of 90.0. The current economic assessment arrived at 91.3 as compared to last month's 90.0 and 89.0 anticipated while the expectations index rose to 92.8 from the previous month’s 91.5 reading and worse than the market expectations of 92.5.
Against this backdrop, the UK FTSE 100 index adds 0.61% to 6,590, Italy’s FTSE MIB gains 0.24 percent to 22,065, France’s CAC 40 is up by 0.34% to 5,568, while the German DAX 30 rises by 0.41% to 13,722. US stock index futures were lower in early morning trading on Friday, after the major indexes closed at new highs overnight.
In currencies, the dollar is marginally higher across the board as some deterioration in risk sentiment fueled demand for the safe-haven US currency. EURUSD has settled in the 1.2250 area during the European hours, signaling its readiness to resume the ascent after a pause. On the upside, the pair needs to overcome the 1.2270 resistance in order to retarget the 1.2300 barrier. The short-term technical outlook remains upbeat as long as the common currency stays above 1.2200.
Nathan Lambert, Head of Global FX Analytical Department