Following solid gains on Wall Street and in Asia, European stock markets opened higher on Friday, as investors focus on the outlook for economic growth. Regional equities were also helped by gains in commodity-linked companies amid a recovery in oil prices. As such, markets climbed to one-week highs in early trading.
On the data front, the Labour Department data showed on Thursday a declining number of Americans claimed unemployment insurance - claims for unemployment benefits dropped to a one-year low last week. In the UK, February retail sales arrived at+2.1% m/m, in line with expectations. Furthermore, Germany’s March Ifo business climate index came in at 96.6 versus 93.2 expected. Expectations index arrived at 100.4 versus 95.0 expected while current assessment came in at 93.0 versus 91.3 expected. Better-than-expected figures added to a more upbeat sentiment ahead of the weekend.
Against this backdrop, the FTSE 100 in London adds 0.58% to 6,713, Italy’s FTSE MIB gains 0.32% to 24,296, France’s CAC 40 is up by 0.28% to 5,969, while the German DAX 30 rises by 0.76% to 14,732. US stock index futures retain a bullish tone, signaling a potential extension in yesterday’s recovery. Later in the day, fresh economic data out of the United States including personal income and spending could affect investor sentiment.
In currencies, the dollar is slightly off four-month highs on Friday while staying elevated despite risk appetite has surged ahead of the weekend. EURUSD is targeting the 1.1800 figure following a plunge to fresh multi-week lows around 1.1760. However, the pair lacks momentum even as economic data out of Germany came in better-than-expected. Increasing upside pressure around the dollar amid a third wave of coronavirus pandemic in Europe are capping more solid recovery attempts.
In commodities, Brent crude surged past the $63 figure in recent trading, extending the recovery following a 4% plunge seen yesterday. The oil market is supported by concerns that a large container ship that ran aground in the Suez Canal may block the vital shipping lane for a few weeks, squeezing supply. On the downside, the $60 level remains in focus after a dip towards $60.30 earlier in the week.
Nathan Lambert, Head of Global FX Analytical Department