European stocks are marginally higher on Tuesday, staying close to record highs, lifted by travel and real estate shares. On the negative side, there are reports that Britain’s next phase in easing of lockdown on June 21 could be delayed by a fortnight amid concerns over the spreading of new variants of COVID-19. In general, markets are trading in tight ranges ahead of a policy meeting of the European Central Bank and U.S. inflation data this week.
Fresh data showed German industrial output fell unexpectedly in April. German ZEW economic sentiment arrived at 79.8 in June, down from 84.4 previous. Current situation for Germany came in at -9.1 in June vs. -40.1 in May. Separately, the Eurozone ZEW economic sentiment for June fell to 81.3 for the current month as compared to 84.0 previous and 77.0 consensus forecast.
Commenting on the survey, ZEW President noted that the decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels. Meanwhile, the final data showed that the Eurozone economy contracted 0.3% in the first quarter versus the -0.6% second estimate.
Against this backdrop, the UK FTSE 100 gains 0.37% to 7,103, Italy’s FTSE MIB adds 0.14% to 25,861, France’s CAC 40 rises by 0.34% to 6,565, while the German DAX 30 advances 0.19% 15,706. US stock index futures struggle for direction ahead of the opening bell.
In currencies, the dollar regains ground on Tuesday as yesterday’s bullish attempts failed. As such, the euro came back under some selling pressure amid a stronger dollar and mostly downbeat economic updates out of Europe. The pair failed to regain the 1.2200 figure yesterday to dip back below the 20-DMA in recent trading. So far, the pair derives support from the 1.2165 area but could see deeper losses in the short term if the greenback manages to stay afloat.
Meanwhile, crude oil prices dipped to the $70.70 area earlier in the day before bouncing back above the $71 figure in recent trading. Despite the technical correction witnessed since the start of this week, downside risks look limited as traders continue to express optimism over global demand recovery. Later in the day, the API’s weekly report and a monthly report from the EIA could affect short—term dynamics in Brent. A daily close above $71 would be a sign of the persisting buying pressure.
Nathan Lambert, Head of Global FX Analytical Department