European stocks opened marginally higher on Wednesday, trying to keep gains during the session despite rising tensions between the US and China. Lingering concerns over a rise in coronavirus cases in parts of Europe and beyond continue to cap gains in equities as global cases of the virus have now topped 20 million. Meanwhile, in a recent interview, US President Donald Trump said he used to have a very good relationship with Chinese President Xi Jinping but he doesn’t feel the same way now.
On the positive side, Russian President Vladimir Putin said on Tuesday the country has approved the world’s first vaccine. However, investors express some skepticism over the news due to the lack of any safety and efficacy data on the drug. Today, Russia’s Health Minister Mikhail Murashko said the first batch of the vaccine against coronavirus is expected to be released within two weeks. As for earnings, Dutch bank ABN Amro jumped 4.9% after the company’s second-quarter profit beat expectations. The bank also announced massive corporate bank overhaul, in which it would quit its trade and commodity financing operations.
On the data front, the second-quarter UK GDP came in at -20.4% QoQ versus -20.5% expected and -2.2% last. On an annualized basis, the figure arrived at -21.7% vs. -22.4% expected. Meanwhile, the UK economy expanded sharply in June, rising by 8.7% versus +8.0% expected and +1.8% previously. Manufacturing output arrived at 11.0% MoM in June versus 10.0% expectations and 8.4% in June. Total industrial output came in at 9.3% versus 9.2% expected and 6.0% in May.
Against this backdrop, the UK’s FTSE 100 gains 0.77 percent to 6,201. Italy’s FTSE MIB edges higher by 0.60 percent to 20,330, France’s CAC 40 adds 0.30 percent to 5,043, while German DAX 30 sheds 0.14 percent to 12,929. U.S. stock index futures are rising along with Treasury yields ahead of the opening bell on Wednesday. In currencies, the dollar is mixed against major counterparts, with European currencies are edging marginally higher amid the prevailing risk demand. EURUSD bounced from fresh one-week lows around 1.1710 and retargeted the 1.18 handle in recent trading as the dollar started to pare gains on the day amid a better risk sentiment and ahead of the US retail sales data due later today. Better-than-expected results could fuel dollar demand but the release will likely disappoint, considering the remaining weakness in the country’s job market.
Nathan Lambert, Head of Global FX Analytical Department