European stocks struggle for direction on Friday amid Brexit-related uncertainty which persists after EU states failed to reach a consensus on the timeframe for a further delay. U.K. Prime Minister Boris Johnson is pushing for a general election on December 12, further increasing uncertainty. However, the bearish bias prevails amid some tensions between the US and China and mixed corporate results.
As such, French luxury group Kering reported stronger-than-expected third-quarter earnings, with the company’s shares rallied 10% following the release. Belgian brewer AB InBev posted flat third-quarter EBITDA, with stocks shed nearly 9.5% after the report. British lender Barclays reported a net loss for the third quarter. But strong underlying figures propped up shares by 1%. Investors also digest the critical comments from U.S. Vice President Mike Pence toward China which triggered negative reaction from Beijing.
Against this backdrop, UK’s FTSE 100 sheds 0.58 per cent to 7,285, Italy’s FTSE MIB gains 0.80 per cent to 22,523, France’s CAC 40 rises by 0.13 per cent to 5,691, and German DAX 30 loses 0.17 per cent to 12,850. Meanwhile, US stocks index futures are set for a muted open after disappointing Amazon third-quarter results which sent the stock down more than 5% in the premarket. A-B InBev, Barclays and Verizon are among the major companies set to report earnings before the opening bell.
On the data front, German IFO survey came in mixed and failed to inspire euro bulls. The IFO business climate came in at 94.6, topping expectations of 94.5 in October. The current assessment came in at 97.8, below forecasts of 98, while the expectations index was registered at 91.5, beating expectations of 91 in October. EURUSD was rejected from daily highs around 1.1120 and got back below the 1.11 handle, trading with modest daily loses. On the downside, the pair could slip further, to the 1.1070 support area should the euro fail to climb back above the 100-DMA around 1.1130 any time soon.
Brent crude has settled around the $61 handle and struggles for direction after three days of gains. The market lacks the upside impetus to extend the recent recovery as traders continue to express a cautious approach due to lingering economic risks. Moreover, the upside is capped by latest signs of escalation in the US-China trade relations after fairly aggressive comments from the U.S. Vice President Mike Pence. Despite oil prices are slightly down on Friday, they are on track for strong weekly gains due to a support from a surprise draw in US inventories and possible action from OPEC and its allies to trim production further.
Nathan Lambert, Head of Global FX Analytical Department