European stocks are trading mostly higher on Friday, with investors continue to express a cautious tone amid the lingering geopolitical uncertainty. At the same time, market participants still hope that the world’s two largest economies will be able to de-escalate their long-running trade war, with a new round of talks is scheduled for October. Deputy trade negotiators from the US and China resumed face-to-face talks for the first time in nearly two months. On the other hand, Trump advisor Michael Pillsbury warned the US is ready to escalate the trade war if a deal isn’t struck soon.
In other news, the UK investors are focused on the expected ruling from the Supreme Court, probably sometime next week. In particular, the judges have been tasked on ruling whether the government acted lawfully in suspending parliament following a legal challenge brought by opposition lawmakers.
Against this backdrop, UK’s FTSE 100 adds 0.16 per cent to 7368, Italy’s FTSE MIB rises by 0.41 per cent to 22,219, France’s CAC 40 adds 0.41 per cent to 5,682, while German DAX 30 gains 0.14 per cent to 12,475. US stock index futures are slightly lower as investors shift back to the trade war.
The dollar was trading marginally lower against major counterparts as the effect from a hawkish rate cut has abated quickly. However, EURUSD, which settled around 1.1050, turned negative on the day recently. German PPI came in worse than expected but the euro was unfazed by the data despite the figures confirmed that the largest Eurozone economy may be heading into a recession in the third quarter. Later today, the pair could nurse additional losses should Fed’s Resengren, who voted against a rate cut on Wednesday, deliver some hawkish comments on monetary policy. The immediate support now comes around 1.1020.
Oil prices have settled around $65 on Friday, finishing the week on a more stable footing after a volatile trading on the news from Saudi Arabia. Brent is set to record a more-than-7% weekly gain after a drone attack on Saudi Arabia’s oil facilities. As a reminder, the attack knocked out almost half of Saudi Arabia’s production. Concerns over disruption to oil supplies out of the kingdom increased after the country asked Iraq for 20 million barrels of crude to supply domestic refineries. Some of the gains in the market are due to a storm flooding the US Gulf Coast, threatening to curb demand for crude. Once above $65, Brent could challenge the $65.50 area. However, as we are heading towards the end of the trading week, some profit taking could take place and put the downside pressure on prices.
Nathan Lambert, Head of Global FX Analytical Department