European equities are trading in a mixed manner on Wednesday amid a lull in the trade-related news. Lack of key developments on this front made investors shift focus to corporate news and the general investor sentiment which looks cautious, in part due to renewed no-deal Brexit concerns. As such, PSA Group shares rose 1.67% after an agreement with Fiat Chrysler Automobiles on a merger deal to create the world’s fourth-biggest auto manufacturer. Bang & Olufsen shares plunged by 14% after the luxury TV and stereo maker revealed its fourth profit warning in a year. The company has cut its revenue and operating margin outlook, blaming fierce competition and poor sales. B&O now expects revenue to drop 13-18% in its 2019-2020 financial year which ends in May. Meanwhile, Volvo Group stocks jumped nearly 4% after an agreement to sell its UD Trucks unit to Isuzu Motors Ltd. for about $2.3 billion.
Against this backdrop, UK’s FTSE 100 gains 0.18 per cent to 7538, Italy’s FTSE MIB adds 0.17 per cent to 23,671, France’s CAC 40 rises by just 0.06 per cent to 5,972, while German DAX 30 bucked the trend despite fresh domestic data showed business expectations improved for a third month. The index declines by 0.30 per cent to 13,248. U.S. stock index futures edged higher but still cautious amid the impeachment inquiry of Trump, ahead of today’s vote in the House of Representatives on two articles that may set up a January trial in the Senate.
On the data front, German IFO survey showed that the business climate index came in at 96.3 on December, up from 95.0 last month and higher than 95.5 expected. The current economic assessment arrived at 98.8 versus 98.1 anticipated and 97.9 in the previous month. Expectation index rose from 92.1 to 93.8 versus a forecast of 93.0. Germany November PPI came in at 0.0% versus +0.1% expected, while the annual figure pointed to further weakening as the fall was the fastest since mid-2016. Eurozone October construction output contracted 1.0% versus +0.7% m/m prior, while Eurozone CPI cam in line with expectations at 1.3% on an annual basis. Mixed European data failed to impress the euro, with EURUSD extending intraday losses to 1.1123 and could threaten the 1.11 handle should market sentiment continue to deteriorate in the immediate term.
In commodities, Brent crude climbed back to flat levels after early correction attempts. Prices encountered support around $65.55 and erased losses but still lacks the impetus to challenge the $66 figure and extend its bull run. Oil traders remain highly sensitive to sentiment in the global financial markets, so lack of directional signals from this front sent the prices into a corrective mode. Later in the day, the EIA reveals its official weekly report. Should the data point to a decline in crude oil inventories, the futures may challenge the $66 barrier but it should confirm a breakout on a daily closing basis.
Nathan Lambert, Head of Global FX Analytical Department