European stocks opened marginally lower on Wednesday before turning mixed in recent trading. Equities struggle for direction, treading water as investors await details of the infrastructure spending plan in the US. The speech by US President Joe Biden coming up later today. Treasury yields have been rising ahead of the speech as investors bet the spending spree will push up consumer prices. In turn, rising yields cap gains in stock markets while pushing the dollar higher.
On the data front, manufacturing and non-manufacturing PMIs in China beat forecasts in March. In Germany, the number of people out of work fell by 8,000 in seasonally adjusted terms to 2.745 million while the unemployment rate remained unchanged from the previous month at 6.0%. Meanwhile, in the Eurozone, the annual CPI came in at 1.3% in March, matching expectations of 1.3% while edging higher from the previous figure of 0.9%.
Elsewhere, European Central Bank President Christine Lagarde said that the central bank won't be guided by the short-term economic moves, and they will give sufficient notice before unwinding stimulus measures. She also noted that the economic situation in the region is marked by uncertainty, and the ECB must provide as much certainty as possible.
Against this backdrop, the FTSE 100 in London sheds 0.39% to 6,745, Italy’s FTSE MIB surges 0.49% to 24,757, France’s CAC 40 is down by 0.14% to 6,079, while the German DAX 30 is flat around 15,000. US stock index futures wobbled ahead of the rollout of Biden’s dollar spending program and details on how taxpayers will fund it. Of note, the White House said in a recent statement that tax increases will likely pay for Biden's $2.25-trillion infrastructure plan.
In currencies, the dollar is marginally off highs registered earlier in the day as bond yields have retreated from fresh 14-month peaks. At the same time, the greenback remains within a broader uptrend, being supported by rising inflation expectations. Still, the cable snapped two days of losing streak, attracting some dip-buying on Wednesday. GBPUSD climbed to the 1.3800 area amid a combination of a weaker dollar and an upward revision of the UK Q4 GDP print. The UK Office for National Statistics reported that the economy expanded by 1.3% in the fourth quarter of 2020 while the previous estimate cane in at 1.0%. However, further upside could be limited in the short term, as a cautious risk sentiment helps the greenback to stay afloat.
Nathan Lambert, Head of Global FX Analytical Department