Following mixed trading in Asia, European stocks are losing ground on Tuesday, staying under pressure since the start of the week as investors continue to closely monitor rising bond yields. In individual stocks, HSBC reported a sharp fall in its annual profit that dropped 34% from a year ago to $8.78 billion. The bank’s stocks fell 2% following the release. On the data front, the Eurozone CPI came in at 0.9% on a yearly basis in January, meeting the flash estimate of 0.9% and 0.9% expectations. The core figures arrived at 1.4% versus +1.4% previous and +1.4% expectations.
Against this backdrop, the FTSE 100 in London sheds 0.80% to 6,559, Italy’s FTSE MIB loses 1.60 percent to 22,641, France’s CAC 40 is down by 0.61% to 5,732, while the German DAX 30 declines by 1.67% to 13,717. US stock index futures turned negative as the markets struggle to shrug off a sharp fall in tech stocks. Later today, Fed Chair Jerome Powell begins his two days of Congressional hearings. Traders will also get new data on consumer confidence and home prices today.
In currencies, the EURUSD pair briefly rose to one-month highs around 1.2180 earlier in the day but failed to preserve gains and retreated during the European hours. The euro turned negative on the day, staying under pressure despite the Eurozone inflation numbers came in line with expectations. However, the pair could regain its bullish bias as Powell, who testifies before Congress later in the day, is likely to weaken the dollar across the board. If so, EURUSD could retarget the 1.2200 handle and refresh one-month highs.
Meanwhile, Brent crude rose to fresh early-2020 highs around $65.80 earlier on Tuesday before giving up its intraday gains. The market received the latest boost from the news that Goldman Sachs Group Inc. predicts prices will advance into the $70s in the coming months. Next week, an OPEC+ meeting takes place. Ahead of the event, there could be some speculations on whether to add more supply to the market in April, with Moscow indicating that it wants to proceed with an increase. In the short term, Brent will likely stay around the $65 figure against the backdrop of the prevailing risk-off tone in the global financial markets.
Nathan Lambert, Head of Global FX Analytical Department