Following solid gains in Asia, European stock markets opened higher on Monday, with investors continuing to cheer vaccine rollouts adding to hopes of economic recovery globally. On the data front, Eurozone industrial production contracted by 1.6% on a monthly basis in December following an expansion of 2.6% in the previous month while analysts expected the output to contract by just 0.6%.
On the positive side, however, the trade surplus in December widened to 29.2 billion euros from 25.7 billion euros, exceeding expectations for a surplus of 25.3 billion euros. Meanwhile, the German Economy Ministry said in a statement earlier today that the extension and tightening of coronavirus restriction measures will continue to weigh on the economy in the first quarter of 2021. In the UK, the health secretary, Matt Hancock, said that things are progressing rather smoothly in the country and that bodes well for a possible economic reopening ahead of the summer.
Against this backdrop, the FTSE 100 in London gains 1.52% to 6,690, Italy’s FTSE MIB rises by 0.93 percent to 23,627, France’s CAC 40 is up by 1.19% to 5,771, while the German DAX 30 adds 0.32% to 14,094. The New York Stock Exchange and Nasdaq are closed on Monday due to Presidents’ day.
In currencies, EURUSD stays in the green today but struggles to overcome the 1.2150 local resistance while deriving support from the 20-DMA, today at 1.2120. The upside potential in the common currency is capped by the regional events mentioned earlier including weak industrial output data. In the immediate term, the EURUSD pair will likely hold above the mentioned moving average but the euro would need the additional bullish impetus to overcome the 1.2150 resistance that stands on the way toward the 1.2200 figure last seen one month ago.
As for oil prices, Brent crude extended the rally on Monday to fresh January 2020 highs after a Saudi-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the Iran-aligned Houthi group. The news raised fears of fresh Middle East tensions, sending the prices to $63.75 earlier in the day. As of writing, oil futures were changing hands around $63.20, nearly unchanged for the day. Hopes for additional US stimulus coupled with easing coronavirus lockdowns added to the positive momentum in the market recently.
Nathan Lambert, Head of Global FX Analytical Department