European stocks opened mostly lower on Thursday before turning mixed in recent trading as investors express a cautious tone ahead of fresh economic data out of the United States due later today. On Wednesday, ECB’s Panetta said it was clearly premature to discuss any paring of emergency asset buying in the Eurozone even though the economic outlook is improving. Regional investors sheered the dovish tone from the central bank’s official. But now, gains in the market being capped by emerging views the Federal Reserve is slowly edging towards a discussion about tightening monetary policy after Federal Reserve Governor Randal Quarles opened the door to discussing the reduction of the bank's bond-buying scheme in one of the upcoming meetings.
Elsewhere, the European Central Bank Governing Council member Pablo Hernandez de Cos said today that the ongoing rise in the Eurozone inflation is transitory. Meanwhile, China’s Commerce Ministry spokesman Gao Feng noted that both sides should push for the implementation of the Sino-US phase one trade deal. Separately, there are reports that China is said to raise limits on offshore borrowing for foreign banks. In the UK, a British Finance Ministry source said that the government hopes that any global deal on a minimum corporate tax rate would seek the large tech companies to pay their fair share of tax.
Against this backdrop, the UK FTSE 100 sheds 0.01% to 7,026, Italy’s FTSE MIB gains 0.36% to 24,867, France’s CAC 40 is up by 0.36% to 6,414, while the German DAX 30 declines by 0.39% to 15,391. US stock index futures are edging lower ahead of key economic reports.
In currencies, the dollar came back under the selling pressure on Thursday despite risk sentiment has deteriorated somehow. Now, traders’ focus shifts to the upcoming economic data out of the United States including the GDP, durable goods orders, pending home sales, and weekly jobless claims due later today. It looks like the greenback would resume the ascent in the short term if the data surprises to the upside.
In other markets, oil futures finished higher on Wednesday, as price support from across-the-board declines in U.S. inventories outweighed concerns over the prospects for a return of Iranian crude supplies to the global market. The Energy Information Administration reported Wednesday that U.S. crude inventories fell by 1.7 million barrels for the week ended May 21. Gasoline supply also declined by 1.7 million barrels, while distillate stockpiles fell by 3 million barrels for the week. As such, Brent crude closed around $68.60, off local highs in the $69 area. Early on Thursday, the futures came under some pressure, however, erasing yesterday’s gains.
Nathan Lambert, Head of Global FX Analytical Department