European stock markets are trading in a mixed manner on Wednesday as investors express a cautious tone amid a fresh batch of earnings and disappointing economic data. Also, market participants express concerns over the ongoing coronavirus pandemic as the U.K. has now replaced Italy with the biggest death toll in Europe. In corporate news, BMW shares plunged nearly 5% after the company warned of significantly lower profit this year. Also, BMW posted a 133% rise in first-quarter operating profit due to the absence of a one-off provision in the same period of last year. Stocks trimmed losses to 3% after the initial reaction to the report.
On the data front, the construction sector activity in the UK plunged to the weakest on record in April amid coronavirus crisis. The final PMI came in at 8.2 last month, up from 39.3 recorded in March versus the consensus estimate of 22.0. Elsewhere, the European Commission revealed its latest economic forecasts. The Eurozone GDP is seen at -7.7% this year and +6.3% in 2021. Meanwhile, Jens Weidmann, ECB Governing Council member and Bundesbank President said that comprehensive and extraordinary monetary policy measures are necessary for the region.
Against this backdrop, UK’s FTSE 100 gains 0.56 percent to 5,881, Italy’s FTSE MIB adds 0.23 percent to 17,426. France’s CAC 40 sheds 0.35 percent to 4,467, while German DAX 30 loses 0.15 percent to 10,713. U.S. stock index futures rose on Wednesday after President Donald Trump pushed again to reopen the economy even if it means more deaths due to the coronavirus.
In currency markets, the dollar is mixed against major counterparts on Wednesday. EURUSD extended losses to April 24 lows around 1.0780 and bounced partially afterward. A daily close below the 1.08 handle will confirm the latest breakdown and could attract more bears. Considering weak economic data out of the Eurozone and gloomy predictions by the European Commission, the common currency will likely remain under the selling pressure so far. Later in the week, the US NFP employment data ill set the tone for dollar pairs. If the figures disappoint and stoke recession concerns, EURUSD may suffer deeper losses amid risk aversion.
In commodities, Brent crude extended the local rally to $32, where the futures nave encountered resistance and retreated below $31. The prices are so far holding above the $30 figure, a break below which may trigger a more aggressive selling pressure in the short term. On the negative side, traders were somehow upset by comments from Russia's Deputy Energy Minister Pavel Sorokin who said that global oil demand recovery is not expected to be fast.
Nathan Lambert, Head of Global FX Analytical Department