European stock markets are little changed on Tuesday, with major indices show mixed dynamics amid the remaining uncertainty over the US-China trade deal. On the positive side, trade negotiators from the two countries had another phone call early on Tuesday and discussed resolving core issues and have agreed to hold further talks on a preliminary deal. But the news failed to inspire investors who want to see more concrete developments and real actions on the way to resolving the long-standing trade dispute. Meanwhile in Europe, according to an opinion poll, British Prime Minister Boris Johnson’s Conservative Party saw its lead over the opposition Labour Party narrow to 7 points ahead of a general election that’s due to take place next month.
Against this backdrop, UK’s FTSE 100 gains just 0.10 per cent to 7403, Italy’s FTSE MIB rises by 0.05 per cent to 23,480, France’s CAC 40 sheds 0.04 per cent to 5,922, and German DAX 30 loses 0.17 per cent to 13,223. Meanwhile, US stocks index futures little changes as well, after sharp gains to fresh record highs during the previous session.
On the data front, the research group GfK data showed that German consumer sentiment is set to rise by 9.7 points in December versus 9.6 previously. Despite a slight improvement in the indicator, the euro failed to derive a significant support from the release as concerns over a potential recession in the Europe’s largest economy still persist. EURUSD is making some recovery attempts on Tuesday, after yesterday’s rejection from the 1.1030 area. Despite a tepid bullish bias, the pair remains vulnerable to further losses amid a relatively strong dollar and mixed risk sentiment due to the lingering trade-related uncertainty.
Oil prices stuck below $63 on Tuesday, with Brent struggling for direction as traders expect further events on the trade front. The futures struggled to confirm a break above the $64 handle and had to retreat from two-month highs. Still, the prices could resume the ascent should risk sentiment improve in the near term. But to strike more solid levels above $65, the markets needs to see a phase one trade deal between the US and China. In the short term, traders will look for cues from a fresh weekly report by API due later today.
As for gold, the precious metal dipped to two-week lows early on Tuesday but managed to hold above the $1,450 area and bounced back into the green territory. After a brief spike in risk-on sentiment in Asia, demand for high-yielding assets has waned fairly quickly which in turn sent the bullion higher. At this stage, considering a heightened uncertainty surrounding the trade talks between the US and China, the outlook for gold looks questionable. But lack of progress towards at least a partial deal in the days to come could help the yellow metal to partially regain the lost ground and possibly retarget the 100-DMA on the way to the key $1,500 upside barrier.
Nathan Lambert, Head of Global FX Analytical Department