European stocks surged decently at the start of the session but had to pare some gains later in the day as investor optimism started to wane again. Also, markets have been in a cautious mood ahead of the important OPEC+ negotiations due later today. Anyway, the sentiment remains mostly positive amid the data showing a slowing spread of the coronavirus pandemic, with European authorities have been eyeing ways to end the lockdowns. The global coronavirus new-case growth slowed to 6.1% from 6.3% on Thursday.
A cautious tone is partly due to concerns that the latest U.S. unemployment claims data could disappoint again. Meanwhile, the Bank of England has agreed temporarily to finance the government borrowing if funds cannot immediately be raised from debt markets. In individual stocks, UBS and Credit Suisse have announced that they will postpone paying out part of their 2019 dividend to shareholders until later this year. Despite the news, both bank’s stocks surged during the session as the decision was due to the mounting pressure from regulators while the creditors still can boast their financial position.
Against this backdrop, UK’s FTSE 100 adds 0.67 percent to 5,715, Italy’s FTSE MIB gains 0.85 percent to 17,528. France’s CAC 40 sheds 0.57 percent to 4,417, while German DAX 30 rises by 0.40 percent to 10,374. U.S. stock index futures point to a flat open after earlier gains. The U.S. Senate will attempt to add $250 billion to the small-business loan program. In general, market sentiment remains unstable due to the lingering uncertainty.
In currencies, the euro and sterling are both trading marginally higher against the dollar, with GBPUSD refreshing one-week highs above 1.24. If the pair manages to confirm the recent breakout on a daily closing basis, traders may bet on further gains towards 1.25. The main driver behind the current ascent in EURUSD and GBPUSD is a weaker dollar amid the latest optimism over expectations that the virus outbreak could peak soon. The greenback feels the additional pressure from a weaker tone surrounding the US Treasury bond yields.
In the oil market, Brent has accelerated the ascent and climbed back above the $34 handle after Russian energy giant Rosneft said it believes that a 10 million barrels per day OPEC+ oil output cut will be sufficient to rebalance the oil market. Earlier, the Russian side reaffirmed backing on joint and coordinated action to support the oil market. Later in the day, the volatility may pick up in the market, with further direction in prices depending on the outcome of the critical OPEC+ virtual meeting.
Nathan Lambert, Head of Global FX Analytical Department