European stocks surged on Friday, boosted by positive earnings updates and upbeat economic data out of the US and Europe. The carmaker Daimler reported a 24% jump in demand for luxury cars in China in the third quarter and raised its 2020 profit outlook. The company’s stocks rallied nearly 2.5% on the report. Barclays reported a net profit of $797.7 million for the third quarter. the bank’s shares jumped over 7.5% on Friday.
On the data front, Germany PMI manufacturing rose to 58.0 (the highest level in 30 months) in October, up from 56.4, above the expectation of 55.5. A strong figure helped to overshadow the disappointment from services PMI that dropped to 48.9, down from 50.6, missing expectation of 49.0. The data pointed to the resilience of the German economy in the face of a second wave of coronavirus cases, adding to the upbeat sentiment among investors.
Against this backdrop, the UK FTSE 100 index adds 1.67% to 5,882, Italy’s FTSE MIB gains 1.18 percent to 19,302, France’s CAC 40 edges higher by 1.34 percent to 4,916, while the German DAX 30 recovers by 1.07% to 12,677. U.S. stock index futures advanced after the final debate between President Donald Trump and his Democratic challenger Joe Biden presented few surprises for election watchers.
In currencies, the euro was boosted by unexpectedly strong manufacturing PMI data out of Germany, sending the euro down across the board. As a result, the EURUSD pair jumped from intraday lows around 1.1785, to register local highs in the 1.1850 area. The next intermediate barrier arrives at 1.1870. Once above this level, the prices could retest the 1.19 handle. However, it looks like the common currency could lack the upside momentum to extend the local recovery due to a cautious approach by traders. Later in the day, the pair could be affected by the US PMI data that would boost investor sentiment further if the results exceed expectations.
In commodities, oil prices are climbing north along with global stocks. On Thursday, Brent crude was boosted by the comments from Russian President Putin who indicated he would be prepared to extend record supply cuts in the face of the ongoing pandemic if market conditions warrant. However, the upside potential in the oil market remains limited amid the spiraling numbers of new infections of COVID-19 in Europe and the U.S. Brent is back above the 100-DMA but is yet to regain the $43 handle to extend the current ascent.
Nathan Lambert, Head of Global FX Analytical Department