European stocks opened mostly lower on Monday as investors focused on a last-ditch effort between the U.K. and EU to reach a trade deal, with several outstanding issues remain to be resolved after weekend talks did not lead to a deal. Meanwhile, the U.S. is preparing economic sanctions on a dozen more Chinese officials in response to Beijing’s crackdown on dissent in Hong Kong, adding to the negative tone among investors to start the week. More coronavirus-inspired lockdowns and rising virus cases in some countries hurt market sentiment as well. Later in the week, the European Central Bank and the U.S. Federal Reserve are both due to release policy decisions that could affect investor sentiment.
Against this backdrop, the UK FTSE 100 index gains 0.26% to 6,567, Italy’s FTSE MIB sheds 0.68 percent to 22,027, France’s CAC 40 is down by 1.15% to 5,545, while the German DAX 30 declines by 0.73% to 13,202. US stock index futures were slightly lower on Monday after another record-setting session seen on Friday.
In currencies, the USD index is getting firmer to start the week, extending the recovery amid some deterioration in market sentiment. As such, EURUSD extended the retreat below the 1.2100 figure in recent trading as traders prefer to take profit at the current levels due to the resurgent geopolitical concerns surrounding the US and China. On the data front, Germany’s October industrial production came in at+3.2% versus+1.6% m/m expected. However, the report did little to ease the selling pressure surrounding the common currency amid a broad-based rebound in the safe-haven dollar demand. If the pressure persists any time soon, the pair could suffer further losses on a break below the 1.2070 area. In a wider picture, however, the euro remains within a broader uptrend.
Elsewhere, oil prices came under a local selling pressure after the rally fizzled out marginally below the $50 handle on Friday. Brent crude has retreated to the $48.40 local support before trimming intraday losses. Oil prices came under pressure as risk sentiment has deteriorated amid rising virus cases globally that forced a series of renewed lockdowns. Also on the negative side, U.S. energy firms last week added oil rigs for the 11th time in 12 weeks. In the short term, the path of least resistance for Brent is to the downside, while the broader trend remains bullish.
Meanwhile, gold prices have been under some downside pressure since Friday, struggling to overcome the 20-DMA for a month already. AS of writing, the precious metal was changing hands around $1,831, off the intraday lows in the $1,822 zone but still negative on the day. A local recovery in the greenback caps bullish attempts in bullion to start the week, with the key support arriving around $1,800 where the 200-DMA lies. On the upside, the prices need to overcome the mentioned 20-DMA in order to resume the recovery.
Nathan Lambert, Head of Global FX Analytical Department