European stocks are nearly unchanged on Wednesday in a sign that the rally in stock markets is beginning to wane due to the lack of fresh bullish drivers. Equities struggle for direction as investors digest mixed corporate results. Shares of A.P. Moeller-Maersk tumbled over 6% after the Danish company reported surging demand in the fourth quarter while Heineken said it swung to a loss for 2020 due to pandemic effects.
On the positive side, shares of Société Générale rose around 3% after the bank said it would launch a buyback in the fourth quarter. Furthermore, its net profit for the final quarter of 2020 fell less than expected. Smurfit Kappa reported higher pretax profit and lifted its final dividend.
On the data front, French industrial production fell for a second straight month in December while German CPI came in line with expectations. Also, Germany is reportedly to extend lockdown until 14 March. As a reminder, the latest lockdown measures are set to run through to 14 February.
Against this backdrop, the FTSE 100 in London adds 0.16% to 6,541, Italy’s FTSE MIB rises by 0.14 percent to 23,334, France’s CAC 40 is down by 0.04% to 5,689, while the German DAX 30 sheds 0.23% to 13,979. US stock index futures rose today ahead of U.S. inflation data, suggesting that Wall Street will resume its recent rally. A speech from Federal Reserve Chairman Jerome Powell on the labor market will be in focus later today as well.
In currencies, the dollar bounced from fresh two-week lows registered earlier in the day. Still, the greenback remains under pressure versus most counterparts ahead of US CPI data. In recent trading, USDJPY witnessed a strong intraday turnaround following an early dip to the 104.40 region where the 100-DMA acted as support, followed by the 20-DMA. The bounce was due to the prevalent upbeat market mood that undermined demand for the safe-haven Japanese yen. Now, the pair needs to regain the 105.00 barrier in order to extend the recovery in the coming days.
Meanwhile, oil prices climbed to fresh January 2020 highs around $61.60 in recent trading, staying bullish despite some corrective attempts in stock markets. Brent crude has been rallying for the ninth day in a row on Wednesday, with upbeat sentiment remains underpinned by another drop in the US stockpiles. The API data showed late Tuesday that the US crude inventories fell by 3.5 million barrels in the week to February 5. Later in the day, EIA weekly crude stockpiles will be closely eyed.
Nathan Lambert, Head of Global FX Analytical Department