European stock markets are marginally lower on Friday as investors digest rising US-China tensions after U.S. President Donald Trump ratcheted up already-heightened tensions with Beijing by banning U.S. transactions with two popular Chinese apps, Tencent’s WeChat and ByteDance’s Tiktok. In turn, China said TikTok and WeChat are compliant with the US laws and international regulations while China’s top diplomat called for the US to create favorable conditions for the implementation of the Phase One trade deal.
As a result, investors have virtually ignored China’s trade data which showed exports surged 7.2% in July from a year earlier, way above a forecast of -0.2%. Meanwhile, industrial production in Germany came in at +8.9% on a monthly basis versus an 8.1% increase expected and +7.4% last. On an annualized basis, industrial production arrived at -11.7% versus -19.5% in May.
Against this backdrop, the UK’s FTSE 100 sheds 0.06 percent to 6,023. Italy’s FTSE MIB edges lower by 0.56 percent to 19,366, France’s CAC 40 loses 0.32 percent to 4,869, while German DAX 30 adds just 0.06 percent to 12,599. U.S. stock index futures are pointing to a lower open amid rising tensions with China. Also, market participants keep a cautious tone ahead of the key US jobs report due later today.
In currencies, the dollar switched into a recovery mode on Friday amid the resurgent safe-haven demand. EURUSD had to retreat as a result but the downside pressure looks limited so far. The pair is holding above the 1.18 figure, a break below which could bring a deeper correction from two-year highs registered earlier this week. As dollar bulls have re-entered the game, the common currency failed to capitalize on upbeat economic data out of Germany. Later in the day, the US NFP employment report will set the tone for the pair and the greenback in general.
Elsewhere, gold prices turned marginally lower during the European hours after a rise to fresh all-time highs earlier in the day. The bullion extended gains to the $2,075 area and retreated slightly, staying firmly within its bullish trend. A local downside correction is seen amid dollar recovery, so once the selling pressure surrounding the greenback reemerges, the precious metal could jump to fresh record highs and challenge the $3,000 next psychological barrier.
Nathan Lambert, Head of Global FX Analytical Department