Following decent gains on Wall Street and in Asia, European stock markets opened higher on Thursday, as investors continued to cheer dovish comments on inflation outlook from the Federal Reserve Governor Jerome Powell. Investors are also looking for Congress to approve President Joe Biden’s proposed economic aid plan. The prospect for additional support adds to the upbeat tone in the markets.
In individual stocks, Standard Chartered plunged over 4.5% today after the British lender posted a 57% fall in annual profit, missing analyst estimates. The bank also restored its dividend and reaffirmed its long-term profit goals, but it did little to ease the selling pressure surrounding stocks following ugly profit numbers.
Against this backdrop, the FTSE 100 in London adds 0.33% to 6,680, Italy’s FTSE MIB gains 0.68 percent to 23,254, France’s CAC 40 is up by 0.49% to 5,826, while the German DAX 30 recovers by 0.08% to 13,988. US stock index futures sea a pullback during the European hours, suggesting the risk-on tone looks fragile.
In currencies, the USD index stays depressed around the 90.00 figure, keeping the narrow trading range after Chief Powell reiterated the ultra-dovish stance from the Fed. As a result, EURUSD derailed the 1.2200 barrier for the first time since mid-January, accelerating the recovery from the 20-DMA. However, the pair could see a pullback later today if the upcoming economic data out of the United States including jobless claims and the GDP surprise to the upside.
Meanwhile, USDJPY continues to rally for the third day in a row on Thursday as the greenback outperforms the Japanese safe-haven counterpart. The pair climbed to 106.15 for the first time in nearly a week but is yet to confirm the latest breakout on a daily closing basis as traders may proceed to profit-taking around the 106.00 figure. If so, the initial support should be expected at 105.80, followed by the 200-DMA around 105.50.
In commodities, oil prices extended the ascent today, climbing to $66.80 in recent trading despite the EIA report confirmed a rise in US crude oil inventories by over 1 million barrels last week. Brent crude derives support from dollar weakness along with positive risk sentiment. However, as the OPEC+ meeting (due on March 4) is nearing, traders may proceed to profit-taking ahead of the event.
Nathan Lambert, Head of Global FX Analytical Department