Following solid gains in Asia, European stock markets opened marginally higher on Thursday as investors continued to digest President Joe Biden’s big infrastructure spending plan that eclipsed concerns about another lockdown in France.
On the data front, German retail sales rose by 1.2% MoM in February versus +2.0% expected and -4.5% last. On an annualized basis, retail sales came in at -9.0% in February versus -8.7% seen in January and -6.3% expected. In the UK, the seasonally adjusted IHS Markit/CIPS manufacturing PMI was revised higher to 58.9 in March versus 57.9 expected and 57.9 first readout. Meanwhile, the Eurozone factory activity grew at its fastest pace on record in March, with IHS Markit’s final manufacturing PMI coming in at 62.5 compared to February’s 57.9.
Against this backdrop, the FTSE 100 in London gains 0.66% to 6,758, Italy’s FTSE MIB surges 0.36% to 24,738, France’s CAC 40 is up by 0.40% to 6,091, while the German DAX 30 edges 0.56% higher to 15,091. US stock index futures rose, pointing to another rally ahead of Friday’s U.S. nonfarm payrolls data that may show the quickest pace of hiring in five months.
In currencies, the dollar is steady around fresh highs while the safe-haven demand has eased amid the improving risk sentiment. As such, the euro bounced modestly from the 1.1700 area but failed to see a more decisive recovery despite strong economic data out of the Eurozone. In a wider picture, EURUSD will likely stay under pressure, with 1.1600 now in sight, as France is just the latest major European nation to impose new restrictions.
Meanwhile, oil prices briefly surged above $64 before retreating marginally in recent trading. Later today, OPEC+ countries are likely to discuss whether to roll over the current oil output cuts in May and beyond or go for a gradual increase of production. According to some sources, there could be a proposal for a gradual increase in output up to 500k bpd in May and June. As such, there are downside risks for Brent as traders awaiting the outcome of the OPEC+ meeting.
Nathan Lambert, Head of Global FX Analytical Department