European stocks are mostly lower on Friday despite upbeat economic data out of the Eurozone, U.S., and China, as a spike in U.S. coronavirus infections tempered investor optimism. A survey showed that China’s services sector grew at its fastest pace in over a decade in June, confirming the recovery process in the world’s second-largest economy. Meanwhile, in the US, nonfarm payrolls grew by a record 4.8 million in June, outstripping expectations of a 3 million rise. In Europe, German car sales plunged 40% in June to a 30-year low while the Eurozone composite PMI came in at 48.5 in June, a sharp rise from May’s 31.9.
Elsewhere, a German government spokesperson confirmed that German chancellor Merkel to meet with Dutch PM Rutte in Berlin next week, where the two may discuss a possible compromise ahead of the EU summit that is due to take place on 17-18 July.
Against this backdrop, the UK’s FTSE 100 sheds 1.10% to 6,171. Italy’s FTSE MIB edges lower by 1.10 percent to 19,671, France’s CAC 40 loses 0.80 percent to 5,008, while German DAX 30 declines by 0.34 percent to 12,565. U.S. markets will be closed today for the Independence Day holiday.
In currencies, EURUSD is threatening the 1.12 support again, staying under the selling pressure after a retreat from local highs around 1.13 yesterday. The euro struggles to regain upside momentum as the ongoing concerns over a rise in coronavirus cases in the US are outweighing market optimism over a surge of nearly 5 million jobs gains in June's Nonfarm Payrolls report, with safe-haven dollar demand keeps a lid on the pair in thin trading conditions.
Meanwhile, oil prices are marginally lower on Friday after failed attempts to break above the $43 handle seen yesterday. Despite the bearish bias, oil market sentiment remains relatively upbeat as traders continue to cheer strong economic updates out of major economies that in turn fuel hopes of a recovery in global energy demand. On the other hand, bullish potential in the market is further capped by worries about a second wave of the pandemic. From the technical point of view, as long as Brent stays above the $40 handle, downside risks are limited.
Elsewhere, gold prices are muted in a tight range around $1,775. Earlier in the week, the bullion registered fresh long-term highs and remains elevated despite a mild downside correction. The fact that the bullion refrains from a deeper retreat from the current levels may signal investors’ readiness to push the precious metal to fresh multi-year tops after a brief pause. As long as the prices remain above the 100-DMA around $1,680, the $1,800 key barrier remains in focus.
Nathan Lambert, Head of Global FX Analytical Department