European stock markets are trading in a mixed manner on Friday as investors continue to monitor developments surrounding China’s coronavirus epidemic and fresh corporate earnings. China’s National Health Commission reported an additional 121 deaths and 5,090 new cases of the coronavirus across the mainland for February 13. On the data front, euro-area gross domestic product rose 0.1% during the fourth quarter of 2019 versus 0.3% in the prior quarter while Germany’s economy stalled in the fourth quarter, with flat GDP falling short of expectations for a 0.1% rise.
Against this backdrop, UK’s FTSE 100 sheds 0.06 per cent to 7,447, Italy’s FTSE MIB loses 0.005 per cent to 24,890, France’s CAC 40 is down 0.12 per cent to 6,085, while German DAX 30 adds 0.28 per cent to 13,783. US stock index futures point to a slightly higher open, mainly as Nvidia shares jumped more than 6% on better-than-expected quarterly earnings. Expedia stocks rallied nearly 12% on upbeat earnings and Newell Brands rose 7.8%.
In currencies, the major pairs are relatively stable on Friday. EURUSD extended losses to fresh long-term lows around 1.0825 and now threatening the 1.08 figure. Apart from a stronger dollar factor, the common currency is negatively affected by dismal economic data out of the Eurozone, as weak figures add to expectations of a rate cut by the ECB. Meanwhile, US economic updates are mostly positive during this period. In these conditions, the pair struggles to attract demand despite fairly attractive levels. In the short term, the euro will likely remain under pressure, especially if risk sentiment remains fragile amid the developments in China.
USDJPY meanwhile has settled below the 110.00 handle after yesterday’s rejection from above this level. Despite the pair is in the green in the daily timeframes, the upside remains limited following an abrupt downside correction witnessed on Thursday. The pair’s dynamics points to an unstable risk sentiment because of contradictory news on coronavirus. It looks like USDJPY price action will remain choppy and unsettled in the days to come due to the erratic sentiment in the global financial markets.
Oil prices extend gains for a fourth day in a row. Brent crude regained the $57 level and refreshed February highs around $57.30. The market is on track for their first weekly gain since early 2020 as traders bet the economic impact of the virus would be short-lived. Also, the market is supported by hopes that Russia will agree to participate in the OPEC+ initiative to make additional cuts in crude oil production. A daily close above the $57 level will improve the short-term technical picture and will open the way to fresh highs. However, the bullish potential is limited as long as investors continue to express concerns over the coronavirus.
Nathan Lambert, Head of Global FX Analytical Department