After a largely positive session in Asia, European stocks are trading higher on Monday, as investors shrugged off concerns over further restrictions across the continent. Initially, the upbeat China manufacturing PMI for October at 53.6 inspired buyers at the start of the week. lockdown. Later, European better than expected manufacturing PMIs helped to offset worries about lockdowns and the ongoing coronavirus pandemic. According to a survey released on Monday, activity in the Eurozone manufacturing sector continued to grow last month, boosted by a surge in German new orders.
In the UK, Prime Minister Boris Johnson announced a second lockdown for England that is likely to start later this week. Also on the negative side, Deutsche Bank economists warmed the U.K. economy may contract up to 10% in November. Meanwhile, widespread concerns over the outcome of the U.S. presidential election Tuesday make investors keep a fairly cautious tone.
Against this backdrop, the UK FTSE 100 index adds 1.26% to 5,647, Italy’s FTSE MIB gains 1.99 percent to 18,299, France’s CAC 40 edges higher by 1.74 percent to 4,674, while the German DAX 30 edges higher by 1.90% to 11,776. U.S. stock index futures point to a rebound following last week’s sharp selloff as investors prepared for a crucial week bringing the U.S. election and a Federal Reserve meeting.
In currencies, the dollar rises across the board though the upside momentum has slowed in recent trading as risk sentiment has improved somewhat. As such, EURUSD dipped to two-month lows around 1.1620. Rising coronavirus cases and fresh restrictions across the region continue to weigh on economic projections in the Eurozone and therefore underpinning the selling bias in the common currency. Positive economic updates helped to curb the downside pressure recently. Still, the pair struggles below the 100-DMA derailed for the first time since late-May. Should the risk-off tone reemerge any time soon, EURUSD could challenge the 1.16 handle.
Meanwhile, crude oil prices hit the lowest level since May on Monday and bounced slightly afterward along with other high-yielding assets. Brent plunged to $36.40 and was trying to regain the $37 handle during the European hours. In a wider picture, the sentiment in the market remains downbeat, as rising coronavirus cases continue to darken the outlook for oil demand recovery while increasing production in the US adding to the negative tone. According to the latest reports, Russian Energy Minister Alexander Novak said that he will be discussing the OPEC+ output cut deal with the heads of Russian oil companies later in the day.
Nathan Lambert, Head of Global FX Analytical Department