Following mixed trading in Asia, European stocks opened flat but managed to make some gains, climbing back to record highs on Wednesday as investors are getting more optimistic over the outlook for economic recovery after the IMF upgraded its projections. Also on the positive side, Moderna brushed aside talk of vaccine delivery issues, saying that they are on track to meet April deliveries. Meanwhile, EMA earlier said there is link between the AstraZeneca vaccine and blood clots, though the cause remains unclear. EMA said to hold briefing on the AstraZeneca vaccine later today.
Elsewhere, in recent remarks, ECB's Knot highlighted that the central bank can flexibly adjust PEPP volumes even within the quarter, if appropriate. He also said that If baseline projections hold up, ECB can start phasing out PEPP from the third quarter.
On the data front, Eurozone March final services PMI arrived at 49.6 versus the preliminary estimate of 48.8. In Germany, the final services PMI arrived at 51.5 versus 50.8, and the UK final services PMI came in at 56.3 versus 56.8.
Against this backdrop, the FTSE 100 in London gains 0.79% to 6,877, Italy’s FTSE MIB sheds 0.02% to 24,756, France’s CAC 40 is up by 027% to 6,147, while the German DAX 30 edges just 0.001% higher to 15,213. US stock index futures were slightly higher following modest losses seen on Tuesday. Now, investors wait for the minutes of the most recent Federal Open Market Committee meeting.
Quite hawkish remarks from Knot lifted the euro in recent trading, sending the EURUSD pair to two-week highs around 1.1890. Now, the prices are targeting the 1.1900 handle, a decisive break above which would pave the way to further gains in the short term. However, the euro’s bullish potential remains limited in the longer term, with the greenback staying within a broad-based uptrend due to outperformance of the economic recovery in the US. As for the upcoming FOMC meeting minutes, the central bank is widely expected to confirm that it is not considering starting normalization sooner than it pledged to do so.
In commodities, oil prices failed to extend the recovery seen earlier in the day, to turn negative around $62.20 following rejection from $63. On the one hand, strong economic data from major economies fuel optimism over a recovery in energy demand. Besides, the API reported a decline in crude oil stockpiles in the US by 2.618 million barrels for the week ending April 2 while the market expectation was a 1.325-million-barrel draw. Later today, the official report from the EIA could add to the selling pressure surrounding Brent if the figures disappoint.
Nathan Lambert, Head of Global FX Analytical Department