European stock markets continue to climb on Friday as investors shrugged off poor economic data out of China and focused on the reopening of major economies instead. Researchers at the University of Chicago Medicine reported rapid recoveries in 125 COVID-19 patients taking the experimental drug Remdesivir as part of a clinical trial, which added to investor optimism. Also, President Donald Trump announced guidelines to reopen the U.S. economy while Germany is also beginning to implement plans to lift lockdown measures. As for the data, Eurozone inflation slowed sharply in March to 0.7% year-on-year, down from 1.2% in February. Against this backdrop, UK’s FTSE 100 gains 3.68 percent to 5,835, Italy’s FTSE MIB adds 3.12 percent to 17,291. France’s CAC 40 rises by 4.00 percent to 4,524, while German DAX 30 rallies by 4.10 percent to 10,724. U.S. stock index futures point to a strongly positive open, cheering plans for a gradual re-opening of the economy and also on reports of a potential drug to treat the virus. As such, the major equity benchmarks may end higher for a second week.
Meanwhile, major currency pairs are trading flat on Friday, with dollar demand seems to be waning following the recent rally. EURUSD managed to bounce from lows marginally above 1.08 but lacks the upside momentum to initiate recovery and climb back above the 1.09 handle. Weak Eurozone inflation data came as no surprise for markets. GBPUSD has encountered resistance in the form of the 50-DMA above 1.25 and retreated, holding above 1.24. USDJPY shows a modest bearish bias below 108.00 as bulls paused after two days of gains.
Elsewhere, oil prices bounced from daily lows and regained the $28 handle. Still, Brent is yet to confirm a break above this level on a daily closing basis, with downside risks persisting amid the lingering concerns over the outlook for global energy demand. The technical picture in the market could improve on a decisive break above the $39 psychological level but it looks like the futures won’t dare to challenge this barrier in the near term due to lack of positive drivers.
In other commodities, gold prices have accelerated the bearish correction from multi-year tops registered earlier this week. The precious metal dipped back under the $1,700 figure and is now threatening the $1,680 region. If the selling pressure persists, market focus may shift to the $1,640 area. In the weekly charts, the picture remains positive despite the retreat from long-term highs, and the longer-term outlook for the bullion remains bullish due to uncertainties related to coronavirus and economic recession.
Nathan Lambert, Head of Global FX Analytical Department