European stocks are mostly positive on Tuesday, as investors continue to monitor developments surrounding Brexit, with the European Union negotiator Michel Barnier said a Brexit deal between the bloc and the U.K. is still possible this week. In general, positive risk sentiment is subdued as China said it wants to conduct further talks before striking a first phase of a partial trade deal with the U.S. Also, market optimism was curbed after Trump imposed sanctions on Turkey and halted trade negotiations with Ankara, along with raising tariffs on Turkish steel by 50%.
On the data front, the German ZEW survey for October showed that the economic sentiment index exceeded market expectations and came in at -22.8 as compared to -27.0 expected and 22.5 in the previous month. The current conditions sub-index deteriorated from -19.9 previously and fell to -25.3 in October versus -26.0 expected. Meanwhile, the Eurozone ZEW economic sentiment for October came in at -23.5 versus -33.0 expected and -22.4 in September.
Against this backdrop, UK’s FTSE 100 sheds 0.11 per cent to 7,205, Italy’s FTSE MIB adds 0.72 per cent to 22,257, France’s CAC 40 gains 0.58 per cent to 5,676, and German DAX 30 rises by 0.54% to 12,554. Meanwhile, US stocks index futures point to a slightly higher open as investors look ahead to the kick-off of the earnings season. Today, BlackRock, Citigroup, Goldman Sachs, Wells Fargo, J.P. Morgan Chase United Airlines and Interactive Brokers are set to release their latest performance numbers.
Meanwhile, Bank of England Governor Mark Carney said that the central bank could cut the key rate close to but slightly above zero if needed. He also noted that they are likely to continue to stay in a low-interest-rate environment. GBPUSD largely shrugged off the remarks by the Bank of England head, with the pair has settled around 1.2650 after a brief jump to the 1.27 barrier earlier in the day after the UK House of Commons leader Jacob Rees-Mogg said that the votes are now there to get a Brexit deal through the lower house of the Parliament.
In commodities, Brent crude remains under pressure, threatening the $58 handle on Tuesday. Weak economic data coupled with the lingering trade uncertainty cap the upside in the market. In particular, China’s factory gate prices declined at the fastest pace in more than three years in September, while Chinese imports had contracted for a fifth straight month. Also, the ongoing US-China trade dispute continues to cast a shadow on the global economy. On the other hand, OPEC Secretary-General Mohammad Barkindo said the Organization of the Petroleum Exporting Countries and its allies will do whatever is in its power to sustain oil market stability beyond 2020, which provided some support to the market.
Nathan Lambert, Head of Global FX Analytical Department