European stocks edged back on Tuesday following yesterday’s rally. Equities turned mixed after a positive start to the session, as investors have already digested manufacturing reports that pointed to a stronger economic recovery across the globe. Also on the positive side, U.S. Vice President Mike Pence said that a coronavirus vaccine could come in the fall.
On the data front, Eurozone June PPI came in at+0.7% versus +0.6% m/m expected. Despite some improvement in June, the overall activity remains subdued due to the coronavirus pandemic. Meanwhile, ECB's Lane said the central bank is committed to providing stimulus needed to support the economic recovery.
In individual stocks, BP shares rallied over 7% despite the oil giant reported a $16.8-billion loss for the second quarter and decided to cut its dividend in half. The company also announced a plan to reduce oil and gas exploration by 40% over a decade while boosting spending on low-carbon activities.
Against this backdrop, the UK’s FTSE 100 adds just 0.11 percent to 6,039. Italy’s FTSE MIB edges higher by 0.24 percent to 19,426, France’s CAC 40 gains 0.06 percent to 4,879, while German DAX 30 declined by 0.46 percent to 12,588. U.S. stock index futures are edging lower after a series of weak corporate results and amid the persisting differences between Democrat and Republican aid plans.
In currencies, the dollar remains relatively resilient on Tuesday following a strong but short-lived recovery seen at the start of the week. EURUSD has settled marginally below the opening levels, struggling to regain the 1.18 handle in a muted trading. GBPUSD came under the renewed selling pressure in recent trading but still holds above the 1.30 key support zone. USDJPY has settled around 106.00 following yesterday’s rejection from the 20-DMA that now acts as the key resistance.
Meanwhile, crude oil prices failed to challenge the $44 level once again and turned marginally lower on the day as risk sentiment has deteriorated again. It looks like traders are still not ready to push the barrel above the mentioned hurdle as there are still too many downside risks both in the industry and globally. In another sign of rising US-China tensions, Beijing reaffirmed today that it will take countermeasures after the United States did not renew visas of Chinese journalists.
Nathan Lambert, Head of Global FX Analytical Department