European stock markets are trading marginally lower on Monday, as investors continue to express concerns over the coronavirus outbreak in China and beyond. Earlier today, China’s National Health Commission said that the death toll from the coronavirus outbreak had exceeded 900 in the country. The total number of confirmed infections across China hit 40,171. On the data front, China producer price index was up 0.1% in January and consumer prices rising 5.4% year-on-year, at their fastest pace since October 2011.
In Europe, the U.K. declared the virus a serious and imminent threat to public health.as for corporate news, shares in Daimler rose nearly 0.5% amid a report that the German carmaker plans to cut up to 15,000 jobs to cut costs, citing global demand slowdown. Anyway, it was not a surprise for investors, as the company announced a cut of at least 10,000 jobs back in November.
Against this backdrop, UK’s FTSE 100 sheds 0.18 per cent to 7,453, Italy’s FTSE MIB adds 0.24 per cent to 24,537, France’s CAC 40 is down 0.36 per cent to 6,008, while German DAX 30 declined by 0.30 per cent to 13,473. US stock index futures struggle for direction, swinging between gains and losses ahead of the official open on Monday.
In currencies, the euro seems to have found a local bottom around 1.0940 but still struggles to regain the upside impetus despite a mild bullish bias in the daily charts. The Sentix research group reported that investor confidence in the Eurozone deteriorated in February amid worries about the coronavirus. The index declined to 5.2 from 7.6 in January. However, the result was better than 4.0 expected. The previous reading was the highest since November 2018. Anyway, the pair mostly shrugged off the report and continued to oscillate around 1.0950 during the European session. The current consolidation may continue in the near term, as there are no significant drivers at the moment. The cautious tone by global investors suggests the upside attempts in the common currency will remain modest in the near term, with bearish risks still persist.
Meanwhile, oil prices struggle to regain the positive momentum following the recent sell-off towards late-2018 lows around $53.60. Brent managed to climb back above the $54 handle but traders refrain from buying as there is still heightened uncertainty surrounding the OPEC+ decision on the deal. Besides, the coronavirus concerns continue to weigh on the market. In such circumstances, the futures will hardly be able to shift into a sustainable recovery mode any time soon, with downside risks prevailing. Once below $54, Brent crude could refresh long-term lows and challenge the $53 figure should the cartel and its allies fail to inspire bulls.
Nathan Lambert, Head of Global FX Analytical Department