European stock markets opened higher on Thursday despite the data showed that economic activity in the region contracted less drastically this month. The composite Eurozone PMI came in at 30.5 compared to an all-time low of 13.6 registered in April. Meanwhile, the World Health Organization said the number of newly-reported cases globally hit a daily record this week, which made investors worried about the long-term impact of the pandemic on the global economy.
In yesterday’s minutes from April’s meeting, FOMC members expressed concerns over a potential second wave of coronavirus infections both in the United States and globally. Meanwhile, the US-China trade tensions continued to escalate after President Donald Trump said China’s incompetence was responsible for mass worldwide killing.
Against this backdrop, UK’s FTSE 100 sheds 0.82 percent to 6,017, Italy’s FTSE MIB edges lower by 0.59 percent to 17,112, France’s CAC 40 declines by 1.01 percent to 4,451, while German DAX 30 loses 1.36 percent to 11,071. U.S. stock index futures are pointing to a negative open as investors prefer a cautious tone amid growing trade tensions with China. Also, traders are awaiting the latest weekly jobless claims data due later today.
Meanwhile, GBPUSD trimmed intraday losses after a better-than-expected UP PMI but failed to enter the green territory as the next report revealed that UK May CBI trends total orders plunged by 62 versus -50 expected. The headline reading slumped to its lowest level since October 1981. The pound has settled around 1.2230, flat on the day, after a short-lived decline below 1.22. As dollar demand is picking up gradually amid risk-off trends, the pair may get back in the red by the end of the day if market sentiment continues to deteriorate.
In commodities, Brent crude struggles to extend gains above the $36.70 region but remains afloat despite risk-on tone has waned again. The market is supported by lower U.S. crude inventories and recovering demand as governments ease restrictions. U.S. crude inventories fell by 5 million barrels last week while analysts had expected an increase. Despite the upbeat tone, Brent may fail to register fresh two-month highs in the short term as there is a strong upside barrier on the way north while risk sentiment looks gloomy.
Nathan Lambert, Head of Global FX Analytical Department