Following mixed trading in Asia, European stocks struggle for direction on Thursday, trying to erase recent losses as risk aversion has abated somehow. The upside potential in European stocks is capped by a new round of coronavirus restrictions in the Eurozone and regulatory concerns that hit Chinese stocks earlier in the day. Chinese technology shares sank on worries that they will be de-listed from U.S. bourses.
Investors express a cautious tone ahead of a virtual meeting between EU leaders to discuss the worrying epidemiological situation in the region. Commenting on the coronavirus situation in the country, Germany’s Chancellor Angela Merkel said that they will defeat the virus while adding that the government can see light at the end of the tunnel. On the data front, Germany’s April GfK consumer confidence arrived at -6.2 versus -12.1 expected, while the prior result was revised from -12.9 to -12.7.
Against this backdrop, the FTSE 100 in London sheds 0.14% to 6,703, Italy’s FTSE MIB gains 0.02% to 24,214, France’s CAC 40 is down by 0.28% to 5,930, while the German DAX 30 declines by 0.18% to 14,583. US stock index futures are ticking higher after yesterday’s losses, but the recovery momentum looks limited as 10-year Treasury yields are a touch higher at 1.624%, up 1.6 bps.
In currencies, the USD index remains steady at fresh four-month peaks around 92.70 on Thursday, advancing for the third consecutive session, as bets of another pandemic wave in Europe hurt the sentiment around the common currency, underpinning dollar demand. As such, EURUSD is holding around the 1.1800 figure, threatening fresh 2021 lows as dollar bulls remain in control. Of note, yields of the US 10-year Treasuries keep trading in a range above the 1.60% level. Later in the day, the final Q4 GDP figures and weekly initial claims are due along with the speech by FOMC’s Clarida.
Meanwhile, oil prices are back under pressure following a strong recovery by 6% on Wednesday. The recent jump in Brent crude was spurred by the grounding of a giant container ship blocking crude shipments through the Suez Canal. Meanwhile, data from the Energy Information Administration showed a fifth consecutive weekly increase in U.S. crude inventories. U.S. crude inventories rose by 1.9 million barrels for the week ended March 19. However, the release did little to impact the market. Today, Brent is holding marginally above the $63 figure, struggling to extend gains amid the persistent strength in the greenback.
Nathan Lambert, Head of Global FX Analytical Department