European stocks opened mostly higher on Tuesday, reversing two sessions of declines as market sentiment has improved somewhat following a sell-off seen in Asia. In Italy, Prime Minister Giuseppe Conte is expected to resign today after a morning cabinet meeting. As investors continue to digest fresh earnings reports, UBS reported a net income of $1.71 billion for the fourth quarter of 2020, a 137% jump on the year. On the negative side, according to the reports from the EU, AstraZeneca failed to guarantee delivery of its vaccine without a valid explanation. Meanwhile, U.K. Prime Minister Boris Johnson is expected to announce new border controls later today.
Against this backdrop, the FTSE 100 in London gains 0.54% to 6,674, Italy’s FTSE MIB adds 0.68 percent to 21,884, France’s CAC 40 is up by 0.94% to 5,523, while the German DAX 30 rises by 1.41% to 13,836. US stock index futures have nearly pared early losses following a mixed session overnight.
In currencies, the dollar pared earlier gains as risk sentiment turned around on the session. As such, EUR/USD is back up to 1.2130 after a dip to 1.2107 earlier in the day. Now, the pair looks steadier ahead of US data. At the start of the day, the safe-haven greenback derived support from US fiscal stimulus deadlock and renewed US-China tensions over the South China Sea.
At the same time, the euro bulls remain cautious amid the lingering political uncertainty in Italy. Now, the pair needs to overcome the 1.2150 intermediate resistance in order to regain the 20-DMA that acts as the key barrier for bulls at this stage. However, the upside potential looks limited for now despite the dollar retreated from one-week highs in recent trading.
In other markets, oil prices turned flat after the recent decline on Tuesday. Still, Brent faces resistance around $56, struggling for direction while staying above the 20-DMA that represents the key support. On the positive side, Geopolitical problems in Libya and Russia help the oil bulls. On the other hand, uncertainty surrounding US stimulus measures and the ongoing pandemic continue to cap gains in the market. Later today, the API report could affect oil prices.
Nathan Lambert, Head of Global FX Analytical Department