As investors shake off Apple warnings on weaker-than-expected Q1 financial results, European stock markets have been trading higher on Wednesday, with Puma stocks leading the gains. The German sports clothing company’s shares rallied nearly 8% after Puma reported that it beat its 2019 earnings guidance as profit and sales grew strongly. Net profit arrived at 17.8 million euros for the quarter, up from 11.5 million euros previously. Sales for the quarter were 1.48 billion euros, also above expectations. The company warned that its first-quarter results for 2020 would be affected by the coronavirus. Anyway, Puma expects to meet its annual goals this year.
Elsewhere, there is a slight slowing of the rate of new virus cases, which lifted investor sentiment as well. Also, China’s facilitates continue to gradually return to production following a prolonged shutdown due to a coronavirus outbreak.
Besides, the regional stocks capitalize on a weaker euro, with the common currency has been trading close to fresh three-year lows. On the data front, U.K. inflation hit a six-month high in January – CPI rose at an annual rate of 1.8% versus 1.3% in December. On the negative side, Eurozone December construction output contracted 3.1% versus +0.7% previously. As such, another report pointed to weakness in the regional economy and added to the selling pressure surrounding the euro.
Against this backdrop, UK’s FTSE 100 gains 0.74 per cent to 7,437, Italy’s FTSE MIB adds 0.78 per cent to 25,419, France’s CAC 40 is up 0.69 per cent to 6,098, while German DAX 30 gains 0.52 per cent to 13,52. U.S. stock index futures point to a higher open in anticipation of FOMC meeting minutes due later today.
EURUSD clings to the 1.08 level on Wednesday, being unable to attract demand despite the attractive low levels. The pair refreshed April 2017 low of 1.0784 and could target 1.0860 should the bearish pressure persist. The common currency remains depressed amid the economic divergence between the Eurozone and the US, with American data coming out much better of late while European updates signal the regional economy struggles and is highly vulnerable to external shocks, including the coronavirus outbreak. Later in the day, the pair may be affected by the FOMC meeting minutes.
In other markets, oil prices have been extending gains for a seventh day in a row. Brent exceeded the $58 figure and registered fresh late-January highs around $58.70 during the European trading, as risk sentiment has improved. Also, the futures received a boost from the news that the US imposed sanctions on Rosneft Trading, the oil trading arm of Russia's state-controlled Rosneft, citing its involvement in Venezuelan oil trade. Technically, a daily close above $58 will confirm the recent bullish breakout.
Nathan Lambert, Head of Global FX Analytical Department