European stocks have steadied on Tuesday following a negative start to the week. Investors keep monitoring political developments in the United States after House Democrats introduced an article of impeachment against U.S. President Donald Trump. The lower chamber plans to vote on the article later this week. market participants remain cautious ahead of a formal announcement of a hefty economic stimulus rollout in the US due on Thursday. At the same time, investors express optimism surrounding a mass rollout of vaccinations across the continent amid rising infections in Europe and other regions.
Elsewhere, in recent statement, BOE's Bailey noted that it’s too soon to reach any conclusion about the need for future stimulus, adding that the central bank needs to weigh how the economy reacts in light of Brexit and the latest lockdown measures. Besides, he called negative rates "controversial", which fueled sterling demand in recent trading.
Meanwhile, senior EU health official said that AstraZeneca vaccine may gain approval at the end of the month. Elsewhere, French finance minister, Bruno Le Maire, said that the country’s economy can have a significant economic rebound in the second half of this year. In Asia, Tokyo governor, Yuriko Koike, urged the central government to tighten border controls.
Against this backdrop, the FTSE 100 in London sheds 0.29% to 6,778, Italy’s FTSE MIB loses 0.24 percent to 22,668, France’s CAC 40 is up by 0.18% to 5,672, while the German DAX 30 rises by 0.40% to 13,992. US stock index futures pointed to a positive start to the session after yesterday’s retreat from all-time highs amid profit-taking.
In currencies, the dollar turned slightly lower following a three-day rally. EURUSD encountered resistance around 1.2180, struggling to regain the 1.2200 handle and the 20-DMA as the recovery momentum lacks the impetus. Furthermore, the local ascent was capped after German Chancellor Merkel said that she expects the lockdown to last until April, adding to concerns over the ongoing pandemic in Europe.
Meanwhile, oil prices climbed to fresh February 2020 highs around $56.70 before retreating slightly. The market continues to derive support from last week’s pledge by Saudi Arabia to voluntarily cut production by 1 million barrels per day. The expectation of additional U.S. fiscal support adds to the upbeat tone in commodities. If the upside bias persists in the short term, Brent could target the $57 figure next.
Nathan Lambert, Head of Global FX Analytical Department