European stock markets are marginally lower on Wednesday amid the lingering uncertainties surrounding a fresh U.S. stimulus package as U.S. President Donald Trump called off talks with Democratic lawmakers on coronavirus relief legislation until after the election.
On the data front, the United Kingdom's Housing Price Index grew 1.6% month-over-month in September, exceeding the consensus of 1.5% growth. The index grew 7.3% year-over-year. In individual stocks, Tesco rallied over 3% after Britain's biggest supermarket chain reported a jump in sales and revenue. Dialog Semiconductor jumped 5.4% after its forecast on better-than-expected revenue in its third quarter. European Central Bank President Christine Lagarde is due to speak later in Paris.
Against this backdrop, the UK FTSE 100 index is flat at 5,949, Italy’s FTSE MIB sheds 0.19 percent to 19,393, France’s CAC 40 declines by 0.18 percent to 4,886, while German DAX 30 sheds 0.34% to 12,862. U.S. stock index futures are rising, pointing toward a rebound from Tuesday’s selloff. Stocks look set to reverse yesterday’s losses after fresh comments from Trump calling for support for airlines and the Paycheck Protection Program.
In currencies, the dollar is mixed in major pairs, with EURUSD making recovery attempts after a sell-off witnessed yesterday as a result of rejection from the 1.18 barrier. As of writing, the pair was changing hands around 1.1750 where the 20-DMA arrives. The longer the prices stay below this moving average, the higher is the risk of another sell-off in the short term. Later today, the FOMC meeting minutes could affect dollar pairs. The greenback will receive a boost if the central bank strikes a less dovish tone than expected.
Meanwhile, oil prices were rejected from intraday highs around $42.40 and turned marginally lower on the day amid the prevailing risk-off sentiment. On the positive side, Brent is supported by the reports about another hurricane in the Gulf of Mexico and the continuing strike in the Norwegian oil fields. However, the futures continue to attract sellers during bullish attempts as worries about lack of stimulus, the ongoing pandemic, and demand recovery continue to persist. In the short term, Brent could retest the 20-DMA and turn it back into resistance. In this scenario, the market focus will shift to the $41.20 area next.
Nathan Lambert, Head of Global FX Analytical Department