European stock markets are mostly lower on Friday amid a recent escalation in U.S.-China tensions over Hong Kong after U.S. President Donald Trump signed legislation in support of the protesters and China responded, claiming the U.S. had sinister intentions. Amid these developments, investors express renewed concerns over the lowering chances of the world’s two largest economies reaching an initial phase one trade deal. Meanwhile, in Europe, French President Emmanuel Macron renewed his criticism of NATO, which added to the negative pressure in the regional markets. Next week, NATO is due to meet for its 2019 summit. On the data front, U.K. consumer confidence remained at its lowest level since 2013 in November, mostly due to a heightened uncertainty over the looming general election. French GDP grew by 0.3% in the third quarter, in line with preliminary estimates. Eurozone CPI came in at +1.0% in November, beating expectations of +0.9% and up from +0.7% in October. The core index rose +1.3% versus +1.2% expected and +1.1% previously. The Eurozone unemployment rate for October remained at 7.5% versus 7.5% expected.
Against this backdrop, UK’s FTSE 100 sheds 0.27 per cent to 7396, Italy’s FTSE MIB adds just 0.05 per cent to 23,353, France’s CAC 40 turned green, gaining 0.15 per cent to 5,921, and German DAX 30 is around the flatline at 13,2427. U.S. stock index futures point to a lower open ahead of a shortened trading session due to the Thanksgiving holiday and Black Friday. No economic data or corporate earnings in the United States are due today.
Most currency pairs remain stuck within narrow ranges, with dollar demand picking up slightly as risk sentiment deteriorated since yesterday after Trump’s signing a Hong Kong bill. EURUSD has been challenging the key 1.0990 area, which if broken could open the wat towards the 1.0930 next support zone. Mostly upbeat economic updates out of the Eurozone failed to fuel euro demand as traders continue to follow the signals from the greenback in the context of risk trends. The downside risks still prevail for EURUSD and a daily close below the 1.10 figure will serve as the additional bearish signal.
In commodities, Brent failed to cling to the $63 handle once again and is back under the selling pressure. The downside is limited by the $62.70 area for now, with $63 remains in market focus. As there are no fresh trade-related headlines today. Oil traders start to gradually shift focus to the upcoming OPEC meeting in Vienna due on December 5-6. According to the latest reports, Omani Energy Minister said that OPEC+ countries have reached a consensus on the extension of the agreement. But this statement failed to inspire oil bulls as investors want to see deeper cuts by the alliance to support the ailing market amid fresh all-time highs in the US crude oil production.
Nathan Lambert, Head of Global FX Analytical Department