Following their global counterparts higher, European equities started the day on a positive footing, with Italian stocks leading the way on the back of news that former ECB president, Mario Draghi, is tapped to be the next prime minister of the country. Investors are also encouraged by the prospect of more fiscal aid from Congress, and fairly upbeat corporate earnings while the panic related to heavily shorted stocks like GameStop Corp. has abated.
On the negative side, the Caixin/Markit services PMI in China came in at 52, representing growth at its slowest pace in nine months. Meanwhile, France January final services PMI arrived at 47.3 versus the preliminary estimate of 46.5. In Germany, the final services PMI came in at 46.7 versus 46.8 preliminary. The Eurozone final service PMI arrived at 45.4 versus 45.0 preliminary.
Against this backdrop, the FTSE 100 in London adds 0.30% to 6,536, Italy’s FTSE MIB gains 2.22 percent to 22,558, France’s CAC 40 is up by 0.46% to 5,588, while the German DAX 30 rises by 0.58% to 13,914. US stock index futures rose modestly ahead of the opening bell in a sign of the persisting upbeat tone among investors.
In currencies, the dollar retains a bullish tone, extending the ascent across the board on Wednesday. Earlier in the day, the USD index eased some ground following yearly tops near 91.30 ahead of ADP report and ISM Non-Manufacturing data due later today. The greenback keeps the upside momentum along with the rebound in US 10-year yields. At the same time, extra gains in the USD index in the longer term appear unsustainable amid a dovish stance from the Federal Reserve.
In other markets, oil prices set fresh one-year highs marginally above the $58 handle on Wednesday before retreating to the opening levels. Oil traders continue to price in a more robust recovery in global energy demand on the back of vaccination and supportive measures from central banks and governments. Also on the positive side, the API report showed overnight that US crude oil stockpiles declined by 4.4 million barrels last week. Brent crude was changing hands around $57.75 ahead of the official data from the EIA due later today.
Nathan Lambert, Head of Global FX Analytical Department