European stocks are trading lower on Monday, as investors were not impressed by details of the partial trade accord between the U.S. and China and continue to nervously monitor developments around Brexit, with the U.K. and the European Union are still divided on customs arrangements. Washington agreed to postpone an increase in tariffs from 25% to 30% on $250 billion of Chinese goods, which had been scheduled for October 15б while China agreed to purchase between $40 billion and $50 billion of U.S. agricultural products. according to Trump, the first phase of a trade deal will be drawn up within the next three-five weeks.
On the data front, China’s import and export figures were worse than expected in September, with exports declined 3.2% and imports contracted 8.5%, reinforcing market concerns over the state of the global economy. Meanwhile, Eurozone industrial production expanded in August after easing for two straight months. Industrial output rose 0.4 percent month-on-month after a 0.4 percent fall in the previous month. On a yearly basis, industrial production fell 2.8 percent after declining by 2.1 percent in July versus -2.6 percent expected.
Against this backdrop, UK’s FTSE 100 sheds 0.66 per cent to 7,199, Italy’s FTSE MIB declines by 0.36 per cent to 22,085, France’s CAC 40 loses 0.61 per cent to 5,631, and German DAX 30 sheds 0.48% to 12,451. Meanwhile, US stocks index futures decline amid rising concerns over global economy and fears about a partial trade agreement which may not help to significantly lower trade barriers as major issues are yet to be resolved.
Meanwhile, European currencies turned marginally lower after a strong rally late last week. EURUSD is giving back some of the recent trading gains, with the pair faced a local resistance around 1.1060 and had to retreat. However, the prices are so far holding above the 1.10 figure and the overall tone looks neutral for the time being. In the short term, as risk sentiment deteriorates, the pair could challenge this support zone should the dollar start to regain strength across the board. On the upside, the common currency needs to clear the 1.1040 intermediate resistance in order to challenge the three-week highs around 1.1060 once again. On Tuesday, ZEW economic survey out of Germany and Eurozone could affect the short-term direction in the euro. Also, traders will continue to monitor developments surrounding Brexit.
In commodities, Brent crude has already nearly erased gains from the second half of last week, with prices got back below the $60 handle and registered daily lows around $58.60. The futures switched into a bearish mode as oil traders were also unimpressed by the details of the first phase of a trade deal between the United States and China, with weak Chinese trade data further undercut optimism. Also, Russian Energy Minister Alexander Novak said there were no talks underway to change the OPEC+ deal, which added to the selling pressure in the market. Meanwhile, the compliance of OPEC+ producers with the supply-cut agreement was seen at above 200% last month.
Nathan Lambert, Head of Global FX Analytical Department