While Asian stocks traded mostly lower, European stocks opened in positive territory on Monday. Regional markets managed to shrug off a rout in Chinese stocks that led losses in Asia despite solid economic data out of the world’s second-largest economy. China retail sales and industrial production figures exceeded expectations on a yearly basis. On the other hand, the upcoming central banks’ meetings due his week cap gains in stock markets as investors await fresh cues on the outlook for the economy and monetary policy.
In recent remarks, the Bank of England Governor Andrew Bailey said that the effect of COVID-19 restrictions on the economy is huge but appear to be reducing. He also added that the economy is expected to get back to pre-pandemic size around the end of this year. Elsewhere, German ICU doctors urged immediate return to partial lockdown amid the resurgent cases.
Against this backdrop, the FTSE 100 in London gains 0.41% to 6,788, Italy’s FTSE MIB adds 1.01 percent to 24,357, France’s CAC 40 is up by 0.42% to 6,071, while the German DAX 30 is 0.32% higher, at 14,548. US stock index futures edge up to start the week following a mixed session seen on Friday.
In currencies, dollar demand prevails in the market but gains look limited as traders are getting more cautious ahead of this week’s central banks meetings. EURUSD stays under pressure while holding above the 1.1900 figure. As the common currency remains on the defensive, this year’s lows around 1.1835 are still in focus for the time being. On the upside, the key barrier arrives at 1.2000. It looks like the pair would struggle to regain bullish impetus in the near term as the elevated US Treasury yields keep supporting the safe-haven greenback.
Meanwhile, oil prices are marginally higher following modest losses seen on Friday. Brent crude continues to flirt with the $70 handle, with bulls lacking drivers to push the futures back to more than one-year highs seen around $71.40 a week ago. On the positive side, data showed China's economic recovery accelerated at the start of 2021. On the other hand, the persisting dollar demand caps gains on oil prices. In the short term, Brent crude will likely continue to oscillate around $70 before deciding on the further direction.
Nathan Lambert, Head of Global FX Analytical Department