European stocks little changed on Monday, struggling for direction at the start of a busy week, with U.S. Federal Reserve holding a monetary policy meeting on Tuesday and Wednesday. On the data front, the German IFO business climate index came in at 96.8 in April versus last month's 96.6, missing the consensus estimates of 97.8. The expectations index fell to 99.5 in April from the previous month’s 100.3 reading and better than the market expectations of 101.3. Following the release, the institute’s economist said that the third wave of coronavirus and bottlenecks in production is subduing the economic recovery.
On the positive side, European Commission President Ursula von der Leyen said fully vaccinated Americans should be able to travel to Europe over the summer. In individual stocks, U.K. engineering group IMI rallied over 7% after lifting its earnings guidance and launching a stock buyback program.
Against this backdrop, the FTSE 100 in London sheds 0.09% to 6,932, Italy’s FTSE MIB gains 0.12% to 24,414, France’s CAC 40 is up by 0.23% to 6,272, while the German DAX 30 adds just 0.06% to 15,288. US stock index futures were a touch lower following solid gains seen last Friday.
In currencies, the EURUSD pair climbed to fresh two-month highs above the 1.2100 figure earlier in the day before retreating slightly following lower-than-expected economic data out of Germany. The euro continues to derive support from dollar weakness, with optimism around the common currency staying unabated ahead of this week’s Federal Reserve meeting that could set a fresh tone for USD-pairs. In the short term, the pair needs to hold above the 1.2100 figure in order to confirm the breakout and extend the ascent seen since the start of this month.
In commodities, Brent crude slipped to mid-April lows just above the $64 figure following failed attempts to hold above the 20-DMA. The coronavirus situation in India, the third-largest importer of crude, continues to worsen, adding to concerns about the outlook for energy demand recovery. also on the negative side, Japan, has placed the Tokyo, Osaka, Hyogo and Kyoto prefectures under a state of emergency until May 11. Besides, oil traders continue to take profit ahead of this week’s OPEC+ meeting.
Nathan Lambert, Head of Global FX Analytical Department