European stocks climbed higher on Thursday ahead of the European Central Bank meeting, with investor attention remains focused on the continuing negotiations on a U.K.-European Union trade deal. On this front, U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to end talks on Sunday. However, U.K. foreign secretary Dominic Raab said recently he couldn’t rule out an extension. According to the latest headlines, the EU Commission proposed target contingency measures for no-deal Brexit scenario.
As for the upcoming ECB meeting, market expectations include a 500-billion-euro increase to the ECB’s Pandemic Emergency Purchase Programme. On the coronavirus front, the U.S. on Wednesday suffered a record 3,054 deaths, while confirmed cases in Europe continued to drop, though still remain elevated.
On the data front, the UK GDP expanded as expected in October, arriving at 0.4% and 1.1% previous. Meanwhile, the Index of services came in at 9.7% 3M/3M versus 14.2% prior. Manufacturing output in the UK arrived at 1.7% MoM in October versus 0.3% expectations and 0.2% in September, while total industrial output came in at 1.3% versus 0.3% expected and 0.5% last. On an annualized basis, the manufacturing production figures came in at -7.1% in October, beating expectations of -8.4%.
Against this backdrop, the UK FTSE 100 index gains 0.44% to 6,593, Italy’s FTSE MIB adds 0.23 percent to 22,019, France’s CAC 40 is up by 0.38% to 5,567, while the German DAX 30 rises by 0.13% to 13,357. US stock index futures erased early losses, pointing to some improvement in risk sentiment following a local sell-off witnessed overnight after a nationwide antitrust lawsuit was brought against social media giant Facebook that seeks the separation of its Instagram and WhatsApp units.
In currencies, EURUSD turned higher on Thursday after the recent downside correction, flirting with the 1.2100 level ahead of the ECB meeting. Considering the recent rally in the common currency to 2.5-year highs, President Christine Lagarde’s comments on the euro strength will be very important for fresh direction on the single currency. As the central bank is expected to boost the stimulus to support the economic recovery, the pair could edge lower in a knee-jerk reaction to the outcome of the meeting.
In commodities, oil prices continue the gradual and modest ascent on Thursday. Brent crude has regained the $49 figure and looks poised for further gains if risk sentiment stays constructive in the near term. Earlier, traders shrugged off the EIA weekly report that showed the US crude oil stockpiles jumped over 15 million barrels last week. in the short term, the oil market will continue to take cues from developments surrounding Brexit talks, US stimulus negotiations, and fresh vaccine news.
Nathan Lambert, Head of Global FX Analytical Department