European stock markets are little changed in light trading on Monday as investors focused on rising U.S.-China trade tensions. The two countries postponed talks planned for over the weekend that had been aimed at reviewing progress on their phase-one trade agreement. Rising coronavirus cases in the continent continue to weigh on market sentiment, with investors keeping a cautious tone ahead of this week’s Fed and ECB meeting minutes.
On the trade front, Chinese foreign ministry declined to comment on trade talks review delay and highlighted that TikTok has done almost everything the US has asked for. Meanwhile, US President Donald Trump said on Saturday he could exert pressure on more Chinese companies including the technology giant Alibaba after he moved to ban TikTok. These developments suggest the conflict could continue to unnerve global investors in the short- and longer-term.
Against this backdrop, the UK’s FTSE 100 adds 0.36 percent to 6,111. Italy’s FTSE MIB edges lower by 0.09 percent to 20,009, France’s CAC 40 gains 0.21 percent to 4,974, while German DAX 30 rises by 0.26 percent to 12,935. U.S. stock index futures indicate Wall Street will make moderate gains on Monday ahead of housing data and fresh corporate earnings.
In currencies, the euro is little changed to start the week amid a lack of fresh drivers. EURUSD struggles to regain the 1.19 handle as the selling pressure surrounding the greenback has eased. In a wider picture, the pair remains stuck within a 1.17-1.19 range for the past several weeks, and it looks like the prices will remain in a consolidation mode at least in the short term. Later in the week, the ECB and FMOC meeting minutes could affect dynamics in EURUSD.
Meanwhile, oi prices failed to break above the $45 handle earlier in the day once again and retreated, threatening the $44.50 area on Monday. Should risk sentiment deteriorate any time soon, the $44 figure may come back into market focus. Downside risks will continue to persist for Brent as long as prices stay below the $46 barrier. Lingering concerns over the outlook for recovery in energy demand will likely continue to cap the upside momentum in the market.
Gold prices turned marginally higher after a brief retreat to the $1,930 earlier in the day. The bullion has settled around $1,950 since then, struggling to get back above the $2,000 psychological handle after an abrupt one-day plunge seen last week. it looks like gold bulls could take a break for the time being and probably wait for a deeper retreat before another attack.
Nathan Lambert, Head of Global FX Analytical Department