After a mixed open, European stock markets turned marginally positive as investors continue to monitor coronavirus developments in the region, with lockdowns being extended in Germany and the Netherlands. Orsted stocks slumped over 6% on warning a return to more normal wind speeds this year would hit operating earnings. As a result, utilities were hit the most.
Meanwhile, French grocer Carrefour jumped 10% after Canadian convenience-store operator Alimentation Couche-Tard said it had initiated talks on a potential merger transaction. Also on the positive side, Spanish telecom company Telefonica rose over 8% after it agreed to sell its mobile phone masts in Europe and Latin America to American Towers for 7.7 billion euros in cash.
Elsewhere, ECB Governor Christine Lagarde said that the December economic projections were still very clearly plausible, with forecasts being based on lockdown measures until the end of the first quarter. She added that some of the uncertainty has been cleared, such as Brexit, US election, and vaccine. The start of the year is more positive than some would argue, Lagarde noted. The ECB head also said that the central bank was monitoring exchange rate movements very carefully. However, it did little to affect short-term dynamics in the euro.
Against this backdrop, the FTSE 100 in London gains just 0.10% to 6,761, Italy’s FTSE MIB adds 0.19 percent to 22,688, France’s CAC 40 is up by 0.33% to 5,669, while the German DAX 30 rises by 0.10% to 13,939. US stock index futures were mildly higher in early morning trading on Wednesday, after modest gains seen yesterday as investors digest possible additional stimulus measures.
In currencies, the USD index keeps gyrating around the 90.00 handle on Wednesday, trying to resume the recent upside following yesterday’s negative price action as yields in the US 10-year benchmark remain high. As such, EURUSD bumped into the 20-DMA and retreated back below the 1.2200 figure while USDJPY turned positive on the day following a bounce from the 20-DMA. The pair climbed from the 103.50 area but still lacks upside momentum to challenge the 104.00 figure. Later in the day, December’s inflation figures will take centre stage.
Oil prices retreated from fresh February 2020 highs registered around $57.40 earlier in the day. As a result, Brent crude has settled below the $57 figure, nearly unchanged on the day. The rally was halted due to overbought conditions in combination with a recovery in the US dollar. Later in the day, the EIA report could affect short-term dynamics in the market after the API data pointed to a 5.8-million-barrel contraction in the US crude oil inventories.
Nathan Lambert, Head of Global FX Analytical Department