European stock markets are trading lower on Friday along with global equities, as coronavirus-related concerns reemerged amid a rise in a number of cases and deaths. According to China’s National Health Commission, another 889 cases had been confirmed in the country, while the death toll rose by 118 to 2,236. Meanwhile, the leaders of the 27 EU member states failed to make any headway in budget talks yesterday, which added to the woes in the regional markets.
On the data front, Eurozone composite flash PMI came in at 51.6 in February, up from 51.3 in January versus 51.0 expected, while manufacturing jumped to 49.1 from 47.9 in January, hitting a 12-month high. Services PMI reached a 2-month high of 52.8, up from 52.5 in January. Positive data helped to somehow ease the negative pressure in the regional markets.
Against this backdrop, UK’s FTSE 100 sheds just 0.05 per cent to 7,432, Italy’s FTSE MIB adds 0.12 per cent to 25,110, France’s CAC 40 is up 0.03 per cent to 6,064, while German DAX 30 rises by 0.10 per cent to 13,678. U.S. stock index futures point to a lower open after the number of new coronavirus cases escalated, fueling concerns over a global economic slowdown.
In currencies, EURUSD has been making shallow recovery attempts on Friday but the momentum remains fragile as the euro is still fundamentally weak. The upbeat European PMIs have eased the downside pressure surrounding the common currency but the general economic picture both in the region and in Germany still leaves mush to be desired, with the recent dovish comments from the ECB adding to the gloomy picture for the pair. As such, EURUSD will likely continue to struggle around the 1.08 handle in the near term, especially on the back of negative risk sentiment.
In commodities, gold prices extended the rally towards fresh multi-year highs on Friday. The precious metal advanced to the $1,638 figure and could see further gains once the prices break above $1,640 in the near term. Later in the day, the bullion may attract some profit taking should the US PMIs surprise to the upside and thus lift the greenback. Anyway, the yellow metal will remain in a firm bullish trend as long as investor sentiment remains unstable amid the coronavirus-related news headlines. On the downside, the key support now arrives at the $1,600 psychological level.
Nathan Lambert, Head of Global FX Analytical Department