European stock markets opened little changed on Friday before turning mixed later during the session. Market optimism was somehow curbed by the reports that Pfizer announced its supply chain challenges that caused the company to slash its coronavirus vaccine rollout estimates for this month. On the other hand, Moderna said that it expects to supply up to 125 million doses of its experimental vaccine around the world in the first quarter of 2021.
As for Brexit developments, the chances of a deal being agreed by the end of the week have diminished somehow after the UK accused France of making new demands at the last second. Today, the President of the European Council, Charles Michel said that rule of law is a key issue linked to EU DNA. He also added that it is essential to make sure that any EU-UK free trade deal sealed by negotiators is acceptable to all 27 EU states.
On the data front, Germany’s November construction PMI came in at 45.6 versus 45.2 prior. Industrial orders arrived at +1.8% yoy in October, exceeding expectations of a contraction by 2%. In the UK, November construction PMI came in at 54.7 versus 52.0 expected and 53.1 in the previous month.
Against this backdrop, the UK FTSE 100 index gains 0.68% to 6,534, Italy’s FTSE MIB adds 0.45 percent to 22,110, France’s CAC 40 is up by 0.38% to 5,595, while the German DAX 30 declines by 0.03% to 13,248. US stock index futures pointed slightly higher Friday morning ahead of a key November jobs report.
In currencies, the USD index has steadied a bit but still trades on the defensive around long-term lows as risk-on trades dominate the sentiment in the global financial markets. After a slight correction, EURUSD resumed the ascent and climbed back to the 1.2170 area, threatening the 1.2200 handle ahead of the US employment data. If the report disappoints, the pair could make another bull run as the dollar will react negatively to weak numbers. However, even a better-than-expected report will hardly play into the greenback’s hands as upbeat figures could add to the upbeat tone in risky assets and thus cap demand for the safe-haven US currency.
Meanwhile, oil prices jumped to fresh March highs marginally below the $50 figure after OPEC and its oil-producing allies agreed to increase production by 500,000 barrels per day beginning in January. The decision came following days of discussions that made investors nervous these days. Adding to the upbeat sentiment in the oil market, encouraging COVID-19 vaccine developments reinforce expectations of a more robust energy demand in 2021. Technically, however, Brent crude may need the additional bullish driver in order to challenge the $50 strong barrier.
Nathan Lambert, Head of Global FX Analytical Department