Overnight, Wall Street stocks closed higher, as positive jobless claims data helped to offset worrisome inflation figures. Applications for first-time benefits falling to a pandemic low of 473,000 in the week ended May 8 while April PPI jumped 0.6%, exceeding forecasts for a 0.3% rise. Following suit, Asian equities rebounded on Friday, with big semiconductor manufacturers leading the advance in the region. As such, European markets keep with the bounce from yesterday, with 10-year Treasury yields keeping a little lower so far on the day.
Also on the positive side, Germany has set a new daily vaccination record with 1.35 million doses administered yesterday. Meanwhile, the UK Prime Minister Boris Johnson has said his government is concerned about the increased transmissibility of the new Covid-19 variant first detected in India.
On the data front, Spain’s April final CPI came in at +2.2%, in line with the preliminary estimate. Now, investors are awaiting the European Central Bank’s minutes of its latest policy meeting to be released later in the day.
Against this backdrop, the UK FTSE 100 gains 0.61% to 7,006, Italy’s FTSE MIB adds 0.35% to 24,571, France’s CAC 40 is up by 0.69% to 6,331, while the German DAX 30 rises by 0.54% to 15,282. US stock index futures point to a positive open. Later today, retail sales will take centre stage seconded by the preliminary reading of the consumer sentiment and industrial production figures.
In currencies, the dollar came under pressure on Friday following a short-lived rally sparked by stronger-than-expected US inflation figures earlier this week, with US 10-year Treasury yields retreating from fresh highs. The USD index loses further traction during the European hours, extending losses to fresh two-day lows near 90.50 following the rejection from the 91.00 hurdle yesterday. As such, the euro managed to get back above the 1.2100 figure, extending gains to the 1.2130 area earlier in the day. The pair retreated partially in recent trading and could face renewed selling pressure if the upcoming data out of the US exceeds expectations.
Nathan Lambert, Head of Global FX Analytical Department