European stocks rose on Thursday as investors cheered a surprise rise in China’s exports a surprise rise in China’s exports. Beijing reported a 3.5% rise in April exports while analysts expected a sharp fall. China's overseas shipments in April rose for the first time this year. The Bank of England held interest rates at 0.1% but signaled its readiness to take further measures should the economic crisis continue to deepen.
Meanwhile, the coronavirus-related developments remain in focus. In Germany’s Chancellor Angela Merkel announced steps to ease the lockdown but also warned that restrictions could be imposed again if cases pick back up. UK Prime Minister Boris Johnson said that lockdown measures could start to be lifted as early as next week. On the corporate front, shares of BT Group tumbled on news of a deal between Liberty Global and Spain’s Telefónica.
Against this backdrop, UK’s FTSE 100 gains 0.77 percent to 5,898, Italy’s FTSE MIB adds 0.85 percent to 17,305. France’s CAC 40 rises by 0.96 percent to 4,476, while German DAX 30 adds 0.95 percent to 10,708. U.S. stock index futures point to a rebound amid the resurgent rise in oil prices and expectations of easing the lockdowns in the country.
Recently, President Donald Trump threatened to end the trade deal if China was not adhering to its terms. According to the latest news, Sino-U.S. top negotiators will hold a phone call as early as next week to discuss progress in implementing a Phase 1 trade deal. Investors will be anxious ahead of this important event.
In currencies, the dollar is trading higher against the Japanese yen for the first time since late last week. The pair has bounced from the 106.00 level and is now challenging the 106.60 region. Despite the recovery, bearish risks persist as risk sentiment remains fragile and could deteriorate at any point. If the upcoming US jobless claims data disappoint, risk aversion may reemerge and send the yen higher again.
EURUSD is flat below 1.08 after failed recovery attempts. The sentiment surrounding the common currency remains cautious amid a gloomy outlook for the Eurozone economy due to the coronavirus pandemic. According to the latest news, planned job cuts in the US-based employers increased by 202% to a record high of 671,129 in April.
In commodities, Brent crude resumed the recovery after a short-lived bearish correction amid profit-taking. The futures are now back above the $31. Targeting the $32 barrier that acted as a local resistance yesterday. Traders express hope for a recovery in oil demand as some countries are gradually lifting restrictions imposed amid the coronavirus crisis. Also, the market is supported by OPEC+ production cuts. However, oil prices will hardly be able to stage a sustainable rally any time soon as a “sell on rallies” strategy remains relevant.
Nathan Lambert, Head of Global FX Analytical Department