After a mixed session on Thursday, European stock markets opened in the negative territory today as risk aversion has intensified following a short-lived recovery in the financial markets. Risk sentiment deteriorated amid the reports that drug remdesivir from Gilead had failed to improve patients’ conditions. A fresh economic report showed that retail sales in the UK had fallen at the fastest rate on record in March, which added to risk-off tone in the regional markets. Meanwhile, the German Ifo survey of business confidence slid to 74.3 in April from 85.9 points in March, the biggest drop on record. Additionally, European Union leaders failed to agree on a stimulus package
Against this backdrop, UK’s FTSE 100 sheds 0.73 percent to 5,784, Italy’s FTSE MIB loses 0.06 percent to 17,001. France’s CAC 40 declines by 0.76 percent to 4,416, while German DAX 30 declines by 0.85 percent to 10,424. U.S. stock index futures are pointing to a positive open as investors digest fresh stimulus measures to limit the economic impact of the coronavirus pandemic - the House passed and sent to President Donald Trump a $484 billion aid package overnight.
In currencies, the euro turned positive on the day after a dip to fresh one-month lows earlier. EURUSD bounced from the 1.0725 area and has settled marginally below the 1.08 handle that continues to act as the immediate upside barrier. The common currency shrugged off dismal economic data out of Germany and regained some ground as dollar demand has waned somehow. However, as risk sentiment remains negative, the pair will likely struggle to stage a robust recovery at this stage and may stay below 1.08.
Elsewhere, oil prices are back around the $25 handle after the recent dip below $24. Brent failed to proceed to a sustainable recovery but at least managed to trim recent losses and is showing some signs of stabilization. Now, the futures need to cling to $25 in order to avoid another sell-off in the short term. the market is partially supported by rising tensions in the Middle East but it is not enough to lift prices substantially from the current levels, considering the persisting concerns over energy demand.
Meanwhile, gold prices are marginally higher on Friday after two days of decent gains. The bullion managed to hold above $1,720 and climbed back to the $1,735 area. Once above $1,738, the precious metal may retarget long-term highs around $1,747. Should risk aversion intensify in the near term, the prices could add to intraday gains later today. On the downside, the $1,700 psychological handle acts as the key intermediate support.
Nathan Lambert, Head of Global FX Analytical Department