European stocks opened mixed-to-lower on Thursday as investors monitor fresh corporate earnings along with the incoming economic data. Yesterday, unexpectedly strong US retail sales fueled inflation concerns that triggered some selling in risky assets while pushing 10-year US Treasury yields to fresh highs. On the positive side, market players continue to believe that the rollout of Covid-19 vaccines will lead to a sharp acceleration in economic growth.
As for corporate earnings, Credit Suisse recorded a $392.79-million net loss for the fourth quarter on the back of higher provisions for legal disputes. Still, the loss was much better than market expectations. Going forward, the bank sounded cautious on the back of the pandemic. Credit Suisse stocks fell 0.35% following the report. Meanwhile, Barclays shares shed 3.2% as the U.K. bank reported a halving of its annual profit. Also, the bank announced share buyback of up to 700 million pounds and resumed dividend payouts after a year-long hiatus due to the pandemic.
Against this backdrop, the FTSE 100 in London sheds 0.26% to 6,693, Italy’s FTSE MIB declines by 0.24 percent to 23,122, France’s CAC 40 is down by 0.19% to 5,754, while the German DAX 30 gains just 0.02% to 13,913. US stock index futures are mostly lower ahead of the jobless claims and construction activity data due later today.
In currencies, the dollar retreats following a rally witnessed on Wednesday as the US 10-year Treasury yields stabilized after a rally. As such, EURUSD is off local lows around 1.2020 and was last seen trading at intraday highs around 1.2070. If the common currency manages to overcome this local barrier, the 20-DMA along with the 1.2100 figure will come back into market focus. On the downside, the ascending 200-DMA continues to act as the key short-term support zone. Later today, the ECB meeting minutes could cap the recovery potential for the euro if the central bank strikes a more dovish tone than expected.
Meanwhile, oil prices correct lower during the European hours after setting fresh early-2020 highs around $65.50 earlier in the day. As of writing, Brent crude was changing hands around $64.60 as traders proceeded to profit-taking following another breakout amid contraction in the US crude oil production due to –record low temperatures in Texas. Later in the day, the EIA weekly report could affect short-term dynamics in the oil market. If the numbers come in better than expected, Brent may trim intraday losses and probably regain the $65 handle.
Nathan Lambert, Head of Global FX Analytical Department