European stock markets are trading lower on Thursday, as investors express concerns over trade uncertainty and a lack of progress in resolving the dispute between the US and China. In exchange for rolling back tariffs on Chinese goods, Trump is seeking significant concessions from Beijing on a number of issues. In its latest move, however, China officially lifted ban on US poultry meat imports as part of trade talks. It may be good news but that’s nearly nothing comparison to the likes of tariffs and the US' demand for agricultural purchases.
In individual stocks, German-listed Qiagen rallied over 12% amid reports that Thermo Fisher is considering a bid for the firm. Daimler shares fell more than 3% after the carmaker announced a cost-cutting program which will negatively impact its earnings in the next two years. Meanwhile, the British fashion brand Burberry Group rose more than 5% after reporting strong first-half earnings.
Against this backdrop, UK’s FTSE 100 loses 0.37 per cent to 7324, Italy’s FTSE MIB is flat at 23,580, France’s CAC 40 adds just 0.04 per cent to 5,909, and German DAX 30 loses 0.31 per cent to 13,189. Meanwhile, US stocks index futures indicate a flat open amid persisting concerns over US-China trade relations. As Chinese Ministry of Commerce spokesman noted today, the rolling back of some tariffs is key to reaching an agreement between the two countries.
On the data front, German economy grew 0.1% in the third quarter, which was slightly better than expected. But the report itself failed to impress the euro, as the data confirmed that the country’s economy has stalled, and at the same time, decreased the chances for fiscal and monetary stimulus. EURUSD extends losses below 1.10, threatening the 1.0990 area which served as a support in mid-October. Once below this level, the downside pressure could intensify and bring the euro to the туче bearish target of 1.0955.
In the UK, retail sales grew 0.2% in the three months ending October - the worst showing in 16 months. But the pound remained nearly unfazed by the report and also continues to ignore dollar strength. GBPUSD stays in a limited range despite the intraday volatility. The pair was earlier rejected from local lows around 1.2825 and has settled nearly unchanged since then. It looks like GBP traders shifted into a wait-and-see mode, awaiting more significant drivers.
In commodities, Brent crude extended gains to the $63.20 area and continue to make bullish attempts, clinging to the $63 level. Oil prices continue to regain ground after being rejected from the 100-DMA and could see further gains should risk sentiment improve in the near term. In its latest report, the Organization of the Petroleum Exporting Countries left its forecast for 2020 global oil demand growth unchanged at 1%, or 1.08 million barrels per day. Now, traders await a fresh weekly report by the EIA which will set a short-term direction for the futures. To confirm a local breakout, Brent needs to stage a daily close above the $63 handle.
Nathan Lambert, Head of Global FX Analytical Department