European stocks are trading in a mixed manner on Thursday, with disappointing German data sent stocks lower. Also, investors continue to monitor developments from ongoing U.S.-China trade talks. White House Economic Advisor Larry Kudlow said yesterday that Washington and Beijing had made "good headway" toward a trade agreement. President Donald Trump is due to meet with Chinese Vice Premier Liu He in Washington today. In other news, German February month-over-month survey data for manufacturing orders came in at -4.2%, well below the consensus of a 0.55% increase, reigniting concerns over the largest European economy.
Meanwhile, Italy's FTSE MIB index slipped 0.5 percent after reports that the government could soon cut its gross domestic product forecast to 0.1 percent this year, down from a 1 percent expansion forecast in December. Against this backdrop, Britain’s FTSE 100 sheds 0.42 percent to 7,386, France’s CAC 40 is down 0.24 percent to 5,455, while German DAX 30 gains 0.14 percent to 11,970. US stock index futures are little changed as investors are cautiously awaiting US-China news. After the initial decline earlier in the day, the greenback is back on the offensive against the European currencies. EURUSD turned lower on the day after another failed attempt to challenge the 1.1250 intermediate resistance. The pair came under pressure after dismal data from Germany as well as amid the waning risk appetite across the financial markets.
Meanwhile, the ECB meeting minutes showed that the bank sees that the persistence of uncertainties continues to weigh on the growth outlook. The regulator also said that the incoming data had continued to be weak, in particular in the manufacturing sector, measures of underlying inflation remained muted, while market-based measures of longer-term inflation expectations had weakened in recent months. A fairly dovish tone by the central bank added to the negative pressure on the common currency, though the pair so far remains above the 1.1220 support. The next major event for the pair is the US NFP employment report due on Friday.
Crude oil prices made some corrective attempts after yesterday’s spike to the $70 barrier. But after a brief break below $69, Brent faced some bids and got back to the opening levels. At this stage, the barrel looks overbought, which prevents in from further rallyб while the risk of profit taking remains.
The EIA data somehow disappointed traders as the report pointed to another record in production at 12.2 million barrels per day, while crude oil inventories unexpectedly increased by 7.24 million barrels in the week to March 29. Meanwhile, gasoline inventories fell by 1.78 million barrels, compared to expectations for a draw of 1.54 million barrels, and distillate stockpiles dropped by 2.0 million barrels versus -0.51 million expected. In the short-term, Brent will likely remain hesitant around the $69 figure unless fresh drivers emerge.
Nathan Lambert, Head of Global FX Analytical Department