European stock markets were mixed on Friday amid thin trading volumes, with investors digesting fresh news on a vaccine. Earlier in the day, the official report showed that China’s industrial profits surged 28.2% year-on-year in October, confirming the ongoing recovery in the second-largest economy. However, the upbeat release was not enough to overshadow concerns over a vaccine amid questions over the way AstraZeneca tested its vaccine.
In individual stocks, Spanish lender BBVA rose over 2% after ending merger talks with Banco Sabadell. The two banks had looked for a deal to create Spain's second-biggest domestic bank. On the data front, the consumer confidence indicator for the Eurozone weakened to -17.6 in November from -15.5, matching analysts' estimates. Services sentiment dipped to -17.3 from -12.1 while the economic sentiment indicator dropped to 87.6 from 91.1.
Against this backdrop, the UK FTSE 100 index sheds 0.32% to 6,342, Italy’s FTSE MIB gains by 0.42 percent to 22,295, France’s CAC 40 is up by 0.47% to 5,592, while the German DAX 30 rises 0.26% to 13,320. Wall Street will reopen today for a half session following the Thanksgiving holiday.
In currencies, the EUR/USD pair showed no immediate reaction to the economic data out of the Eurozone and was last seen gaining 0.10% on a daily basis at 1.1923. The dollar remains under some pressure versus major counterparts, though the overall trading activity stays muted ahead of the weekend. On the upside, the 1.1930 local resistance caps gains in the common currency while the ascending 20-SMA has been acting as support for the last three weeks.
GBPUSD turned lower on the day and fell to session lows around 1.3315 in recent trading as Brexit talks still seemingly leading nowhere despite Michel Barnier will be headed to London later today to continue negotiations. UK Prime Minister Boris Johnson has said that the likelihood of a deal depends on the EU and that Britain would prosper with or without an agreement. It looks like that the pound will stay on the defensive in the short term as the 1.3400 barrier deters buyers.
In commodities, oil prices reclaimed the $48 figure in recent trading following the recent correction to $47.33. The sentiment in the market has improved somewhat after the reports that Saudi and Russia energy ministers to hold informal talks with OPEC+ JMMC on Friday. The OPEC+ countries are going to want ahead of the ministerial meetings next week on 30 November and 1 December. In the short-term, Brent crude needs to confirm the recovery above $48 on a daily closing basis in order to avoid a deeper correction and resume the rally towards the $50 handle.
Nathan Lambert, Head of Global FX Analytical Department