Along with other global markets, European equities are gaining upside momentum on Tuesday despite coronavirus fears are still there. Also, positive sentiment is due to strong quarterly results revealed by BP. The company’s shares rose more than 4%, seeing their best one-day rally in more than a year. BP raised its dividend and reported a narrower profit fall than many of its rivals. The company’s underlying replacement cost profit fell to $2.6 billion from $3.5 billion, and it said it would increase its dividend by 2.4%. Besides, global stocks received some support from a better sentiment in the oil market, where the futures are seeing a rebound from more than one-year lows.
Against this backdrop, UK’s FTSE 100 adds 1.32 per cent to 7,422, Italy’s FTSE MIB gains 1.62 per cent to 23,838, France’s CAC 40 is up 1.26 per cent to 5,905, while German DAX 30 gains 1.21 per cent to 13,202. US stock index futures are set to stage a rally for a second day in a row, with Dow futures indicating a positive open of over 300 points. In the premarket trading, Apple stocks jumped 1.7% while Tesla shares were higher by 6% following a jump by nearly 20% on Monday after Argus Research raised its price target to $808 from $556.
In currencies, the dollar is mostly higher against the majors, with EURUSD extending losses after a rejection from the 1.11 barrier at the start of the week. The pair dipped below the 100-DMA around 1.1070 and received support at 1.1040. Despite the bearish momentum has slowed somewhat, risks are skewed to the downside, as dollar stays afloat and risk sentiment remains fairly fragile at this stage, with coronavirus-related concerns still linger. The Eurozone producer price index came in line with expectations and failed to affect the euro, with the general sentiment surrounding the greenback continues to set the tone for the pair. On Wednesday, the common currency may see a reaction to the service PMI data and the US ADP employment report, while the key release is scheduled for Friday, when the United States will reveal the NFP jobs data.
In commodities, Brent crude briefly dipped below the $54 handle earlier in the day and turned into a recovery mode but still struggles to recoup yesterday’s losses, staying below the $56 handle. According to the latest news, Russia's energy minister Novak said that he can't say if now is right time to deepen oil production cuts. The statement brought some uncertainty to the market that is still struggling amid worries about the outlook for energy demand in China because of the spreading coronavirus. Later today, the API reveals its weekly crude oil inventory report but market focus if still on the developments in China and the recovery momentum looks fragile at the moment.
Nathan Lambert, Head of Global FX Analytical Department