Following fresh all-time highs seen on Wall Street overnight, European equities opened higher on Friday, with the technology sector leading the gains as the U.S. Congress confirmed President-elect Joe Biden’s election victory while Trump admitted that the Biden administration will take charge on January 20. Also on the positive side, a study showed that the Pfizer and BioNTech vaccine is effective against the new mutations of the virus found in the U.K.
In individual stocks, Credit Suisse fell 3% in early trade after the giant projected a net loss for the fourth quarter on the back of an $850 million provision for a long-running dispute in the U.S. over a residential mortgage-backed security. On the data front, Eurozone November unemployment rate came in at 8.3% versus 8.5% expected. In the UK, December Halifax house prices arrived at +0.2% m/m versus +0.5% m/m expected.
Against this backdrop, the FTSE 100 in London adds 0.07% to 6,861, Italy’s FTSE MIB gains 0.67 percent to 22,899, France’s CAC 40 is up by 0.29% to 5,686, while the German DAX 30 adds 0.70% to 14,065. US stock index futures rose modestly early Friday morning ahead of jobs report due later today. The consensus is for a gain of just 65,000 jobs this time.
In currencies, the dollar extends the recovery versus most counterparts on Friday despite a rally in global stocks amid positive risk sentiment. The current ascent in the greenback looks corrective while in a wider picture, the US currency remains within a broad bearish trend. As such, EURUSD was rejected from the 1.2350 area earlier this week and has slipped to the 20-DMA in recent trading. If this moving average (today at 1.2220) gives up, the pair could challenge the 1.2200 support zone in the short term.
Meanwhile, oil prices have settled just below the $55 barrier amid a global risk-on rally. The futures climbed to February 2020 highs, retaining a bullish bias on the daily charts. However, there is a risk of a bearish correction at this stage, especially as the daily RSI has entered the overbought territory. Earlier this week, Saudi Arabia announced an additional million barrels of crude oil production cuts. The decision, along with the fact that the OPEC+ countries reached an agreement on production curbs starting in February, helped to push the futures to fresh multi-month highs. Now, the question is if Brent will manage to hold onto gains and extend the rally.
Nathan Lambert, Head of Global FX Analytical Department