European stock markets traded higher on Tuesday in the run-up to President-elect Joe Biden’s inauguration. Earnings season adding optimism as well. As such, Logitech shares rallied 6% after the Swiss-U.S. company raised its 2021 outlook for sales growth and profit for the third time. Meanwhile, Rio Tinto stock rose 0.71% after the mining giant reported a rise in fourth-quarter iron ore shipments. On the negative side, German chancellor Merkel reportedly wants to extend lockdown measures until 15 February. As a reminder, the current lockdown measures will stay in place until late January.
On the data front, Eurozone November current account balance came in at 24.6 billion euros versus 26.6 billion prior. Eurozone November construction output arrived at+1.4% versus +0.5% m/m prior. In Germany, January ZEW survey current situation came in at -66.4 versus -68.3 expected while the Eurozone expectation index arrived at 58.3 versus 54.4 in December.
Against this backdrop, the FTSE 100 in London gains 0.28% to 6,739, Italy’s FTSE MIB adds 0.37 percent to 22,581, France’s CAC 40 is up by just 0.07% to 5,621, while the German DAX 30 rises by 0.33% to 13,893. US stock index futures advanced ahead of Biden’s inauguration and Yellen’s testimony.
In currencies, EURUSD climbed to intraday highs around 1.2125 after German ZEW economic sentiment beat estimates. Besides, the dollar retreats today versus most counterparts as positive risk sentiment prevails in the global financial markets. Later in the day, dynamics in USD pairs will depend on Yellen’s tone. She is expected to tell the Senate Finance Committee that the country is headed for a major recession unless they “act big.” If so, risk sentiment could deteriorate and thus push the safe-haven greenback higher.
Elsewhere, oil prices regained the $55 handle on Tuesday, facing resistance at $55.50 following yesterday’s dip to $54.50. Sentiment in the market looks mixed. On the one hand, China’s record-high refinery output in 2020 boosted positive tone in commodities. On the other hand, the rising number of coronavirus cases, along with lockdowns in Europe and China, continue to weigh on futures.
Nathan Lambert, Head of Global FX Analytical Department