European stock markets gained on Tuesday after mixed dynamics in Asia. Investors are cheering decent PMIs from China, where the official manufacturing index came at 52 in March versus 45 expected. Meanwhile, the World Health Organization said there are now more than 782,000 global cases and at least 37,000 people have died from coronavirus. The U.S. has the highest number of cases, at over 164,000. At the same time, the WHO reported that there appears to be a stabilization of cases in Spain and Italy, which helped to ease concerns in the regional markets, at least partially. Still, the limited upside impetus in stocks confirms that investors remain cautious amid the ongoing outbreak.
Against this backdrop, UK’s FTSE 100 gains 0.51 percent to 5,591, Italy’s FTSE MIB adds just 0.07 percent to 16,882. France’s CAC 40 sheds 0.08 percent to 4,374, while German DAX 30 rises by 0.41 percent to 9,857. U.S. stock index futures point to a mixed-to-lower open as the optimism shows some signs of waning already. Earlier, the climbing coronavirus count led President Donald Trump to extend distancing guidelines through April 30, with New York state continuing to be the epicenter of the outbreak in the United States with 41% of the country's confirmed total.
Meanwhile, the greenback remains on the offensive, extending gains against the majors. As such, USDJPY resumed the ascent after three days of losses and reclaimed the 200-DMA around 108.30, targeting the 100-DMA that arrives at 109.00. However, the bullish potential in the pair looks limited as risk-on sentiment has been waning already, so the safe-haven yen demand could pick up again soon. On the downside, the immediate support now arrives at the above-mentioned 200-DMA.
The European currencies are also lower against the dollar. EURUSD has derailed the key moving averages and is now threatening the 1.09 handle. Once below, the euro will target the next support around 1.0880. Should the pair manage to hold above the immediate support, a recovery may begin as the USD demand may wane on the back of rising coronavirus cases in the US. GBPUSD dipped to 1.2240 but managed to trim intraday losses afterward and has settled above 1.23.
In the oil market, Brent crude has recovered above $27 but still struggle to show more sustainable gains as demand-related concerns continue to prevail in the market. At the same time, the futures stay afloat in the short term amid hopes for some decisive steps from major producers after yesterday’s phone call between Trump and Putin. On the upside, Brent may challenge the $28 handle if risk sentiment remains positive in the near term. Otherwise, the futures may resume the retreat and get back below $27.
Nathan Lambert, Head of Global FX Analytical Department