Following the buoyant mood in Asia, European stocks have settled in positive territory on Tuesday as investors continue to digest the release of a private survey of China’s manufacturing activity that pointed to a recovery in the world’s second-largest economy. In particular, the Caixin/Markit manufacturing PMI for November came in at 54.9 — its highest reading in ten years. Vaccine developments continue to add to the upbeat tone among investors, as Moderna has filed for US and European emergency regulatory approval of its coronavirus vaccine while Pfizer has already filed for the same US approval.
On the data front, Eurozone PMI manufacturing came in at 53.8 in November, down from October’s 54.8 while Germany PMI manufacturing stood high at 57.8. The flash Eurozone CPI came in at -0.3% in November, missing expectations of -0.2% and -0.3% previous. Still, unimpressive figures failed to erase investor optimism as markets remain focused on vaccine developments and stimulus hopes.
Against this backdrop, the UK FTSE 100 index adds 1.87% to 6,383, Italy’s FTSE MIB gains 0.29 percent to 22,125, France’s CAC 40 is up by 1.03% to 5,575, while the German DAX 30 rises by 0.89% to 13,409. US stock index futures rose solidly after a local downside correction from the overbought readings. In individual stocks, Zoom reported better-than-expected quarterly results and an upbeat guidance. Still, the company’s stocks slipped over 5% in the after-hours trading. Meanwhile, Tesla stocks briefly rallied to fresh record highs but finished off tops, having shed 3.10% during the session.
In currencies, the USD index is oscillating around the eight-month support line around 91.70 after registering fresh 2020 lows in the 91.50 zone on Monday. By the end of the day, the greenback managed to stage a solid bounce but came under renewed downside pressure today as positive risk sentiment continues to drive the safe-haven dollar lower across the board. If the mentioned support line gives up, a bearish extension to 91.00 could be expected next.
As such, EURUSD is back targeting the 1.2000 handle that acted as resistance on Monday. The euro regain upside bias but struggles to challenge this significant hurdle as the bulls seem to be lacking momentum at this stage. Bleak economic data out of the Eurozone and Germany helped to somehow cap the bullish potential in the common currency. Later in the day, the pair could be affected by statements from the ECB and the Fed governors as well as fresh US economic data.
Nathan Lambert, Head of Global FX Analytical Department