European stocks opened lower on Thursday, as concerns over the rise in coronavirus cases overweighed the optimism over progress on a potential vaccine, with the case growth on the continent has dropped but is still elevated. Of note, Germany RKI said it expects the uncontrolled spread of infections in some parts of the country, with the 261 deaths reported yesterday being the highest since April. On the positive side, Moderna said to begin assessing Phase III vaccine trials data within a week, so another potential vaccine pop could come soon to the global markets.
On the data front, the preliminary reading of the third quarter of 2020 UK GDP came in at 15.5% versus 15.8% expected and -19.8% last. On an annualized basis, the figure came in at -9.6% versus -9.4% expected and -21.5% seen previously. The index of services arrived at 14.2% 3M/3M in September versus 11.2% expected and 7.1% prior. Manufacturing output arrived at 0.2% MoM in September versus 1.0% expectations and 0.7% booked in August, while total industrial output came in at 0.5% versus 0.8% expected and 0.3% last.
Against this backdrop, the UK FTSE 100 index sheds 0.52% to 6,348, Italy’s FTSE MIB declined by 0.57 percent to 20,873, France’s CAC 40 edges lower by 0.98 percent to 5,391, while the German DAX 30 loses 0.83% to 13,106. Meanwhile, the US stock index futures are pointing lower ahead of the opening bell on Wall Street.
In currencies, the dollar is mixed on Thursday while staying relatively stable after the USD index has recovered above the 93.00 figure. EURUSD bounced from the 20-DMA and climbed to intraday highs, having erased yesterday’s losses in recent trading. The pair climbed back to the 1.18 area but is yet to confirm the breakout on a daily closing basis as the current recovery looks fragile and unsustainable. Later in the day, the Fed’s and ECB’s governors due to speak, and their potential comments on the economy and monetary policy could set further direction for the pair.
Meanwhile, oil prices struggle to regain upside momentum on Thursday, with Brent trading unchanged on the day during the European hours. Earlier bullish attempts were capped by the release of a closely-watched monthly report from the International Energy Agency. The agency cut its 2020 global oil demand forecast and now expects world oil demand to contract by 8.8 million barrels per day this year. The IEA also added that it does not expect the prospect of a coronavirus vaccine to significantly boost demand until well into next year. Downbeat estimates sent the prices lower from intraday highs around $44.25. Mow, market focus shifts to the EIA weekly inventory report.
Nathan Lambert, Head of Global FX Analytical Department