European equities were lifted by the news about the resumption of coronavirus vaccine trials to start the week. AstraZeneca said it has received confirmation from the UK Medicines Health Regulatory Authority that it is safe to resume clinical trials. However, gains were limited, and the upbeat sentiment has waned in recent trading. In part, the regional markets were weighed down by energy stocks as crude oil prices continued to retreat after a two-week plunge.
As of writing, major indexes were mixed and little changed on the day. Investors remain cautious after the recent sell-off in the US tech stocks that triggered a decline in global equity markets. Also, market participants are preparing for the upcoming central banks’ meetings due this week, including the Federal Reserve, the Bank of Japan, and the Bank of England.
On the data front, industrial production data for the Eurozone for July came in at 4,1%, down from a jump by 9.1% in the previous month and lower than 4.2% expected. Meanwhile, in its latest monthly report, the German Economy Ministry said that the ongoing economic recovery has weakened lately but VAT reduction and child bonus are expected to give impetus to domestic demand in the second half of the year. Against this backdrop, the UK FTSE 100 index edges lower by 0.18% to 6,021, Italy’s FTSE MIB sheds 0.25 percent to 19,770, France’s CAC 40 rises by just 0.15 percent to 5,041, while German DAX 30 is nearly flat around 13,195. Despite some hesitation in Europe, U.S. stock index futures are rising ahead of the opening bell, buoyed by deal activity and signs of progress toward a vaccine.
In currencies, the dollar is trading around the intraday lows against major rivals as risk-on sentiment persists despite the European stocks erased early gains. EURUSD is flirting with the 1.1875 intermediate resistance, a break above which could open the way toward 1.19. The pair shrugged off the above-mentioned economic report out of the Eurozone, being driven by sentiment surrounding the greenback. If the common currency fails to overcome the intermediate barrier any time soon, it could trim intraday gains, especially in case of another sell-off in the US tech stocks.
In commodities, oil prices remain under pressure despite Brent crude has bounced from lows around $39.40 in recent trading. The futures stay below the $40 psychological level, and the selling pressure will likely persist in the short term despite weakness in dollar demand, as traders are still focused on the energy demand recovery outlook that looks clouded amid rising activity in the US shale oil fields coupled with the persisting global risks, including a fragile and uneven economic recovery amid the ongoing coronavirus pandemic.
Nathan Lambert, Head of Global FX Analytical Department