Following recent gains, European stocks are losing ground during the last trading session of the week, with investors digesting the latest corporate news and developments surrounding the coronavirus. Citing the decease outbreak, S&P Global Ratings has lowered its growth forecasts for China for 2020 to 5% from 5.7% prior. The death toll from the virus was at least 638 as of Thursday evening. More than 31,000 people have been infected with the virus worldwide, the vast majority of them in China.
In corporate news, following a protracted spying scandal at Credit Suisse, the bank announced that Tidjane Thiam is resigning as chief executive officer. The lender’s stocks tumbled over 4% on the news. On the data front, German industrial production plunged by 3.5% in December versus +0.1% expected. French industrial output also fell 2.8% in December against an expectation of -0.4%.
Against this backdrop, UK’s FTSE 100 sheds 0.71 per cent to 7,451, Italy’s FTSE MIB loses 0.06 per cent to 24,474, France’s CAC 40 is down 0.29 per cent to 6,020, while German DAX 30 declined by 0.58 per cent to 13,496. US stock index futures point to a sharply lower open, with Dow futures indicating a drop of nearly 200 points after the recent rally to fresh all-time highs in the previous session.
In currencies, the dollar remains resilient on Friday, with EURUSD tumbling to fresh four-month lows around 1.0950, weighed by another portion of dismal economic data out of the Eurozone coupled with risk aversion that reemerged at the end of the week. Despite the oversold conditions, the pair remains under the selling pressure, struggling to regain the upside impetus following being rejected from local highs around 1.11 on Monday. As a result, the euro finishes the week with the biggest losses since early-November. Further on, the pair’s dynamics will depend on the general sentiment surrounding the greenback. The dollar’s dynamics in turn will be affected by the key US employment data due later today.
Brent crude got back below the $55 handle after a rejection from the $56.50 area on Thursday. Traders continue to sell the futures on bullish attempts which confirms the markets remains depressed. On top of coronavirus fears, oil prices feel the pressure from the uncertainty surrounding the OPEC+ technical committee decision. Russia said they will announce their verdict on the proposal next week. In a baseline scenario, market participants expect the cartel and its partners to cut production by additional 600,000 barrels per day.
Nathan Lambert, Head of Global FX Analytical Department