Following mostly positive dynamics in Asia, European stock markets opened marginally higher on Wednesday after U.S. Treasury Secretary nominee Janet Yellen called for big fiscal spending by underlining the need to help the economy amid the pandemic. Also, upbeat corporate earnings help to offset tighter German restrictions to fight the coronavirus. Italian Prime Minister Giuseppe Conte won a confidence vote in the upper house Senate yesterday, allowing him to remain in office after a junior partner quit his coalition last week.
On the data front, the UK Consumer Prices Index 12-month rate came in at +0.6% in December when compared to +0.3% registered in November while beating expectations of a +0.5% print. The core CPI arrived at +1.4% last month versus +1.1% in November.
In individual stocks, Richemont posted a 5% increase in quarterly sales while ASML Holding NV rose over 2.0% after it posted better-than-expected sales for the fourth quarter. Meanwhile, Morgan Stanley, Citigroup and JPMorgan all raised their price targets for Logitech, sending the Swiss-American software manufacturer’s stock higher by more than 5% during the session.
Against this backdrop, the FTSE 100 in London gains 0.11% to 6,720, Italy’s FTSE MIB adds 0.60 percent to 22,576, France’s CAC 40 is up by 0.41% to 5,621, while the German DAX 30 rises by 0.53% to 13,888. US stock index futures rose early on Wednesday as investors brace for Biden's inauguration later in the day.
In currencies, the dollar extended losses on Wednesday as upbeat risk sentiment in the global financial markets prevails. The EURUSD pair faced intraday resistance around 1.2160 and has retreated since then, turning marginally negative on the day as a result. Still, the selling pressure surrounding the greenback could intensify again after Biden's inauguration in anticipation of fresh stimulus measures in the United States. In the short-term, the euro needs to hold above the 1.2100 figure in order to avoid another bearish correction.
Elsewhere, oil prices regained upside impetus on Tuesday, staying positive today. Brent crude reclaimed the $56 as support but has encountered resistance around $56.50 and retreated marginally in recent trading. Yellen’s tone helped the market to shrug off the latest monthly report from the IEA. The International Energy Agency on Tuesday cut its 2021 global oil demand forecast, citing soaring coronavirus cases and renewed lockdown measures.
Nathan Lambert, Head of Global FX Analytical Department