European stock markets opened firmer on Monday, with London being closed for a public holiday. Regional equities fell on Friday in reaction to surging coronavirus cases in Spain, France, and Italy. Investors continue to digest a dovish message from the Federal Reserve while lingering hopes for a vaccine lift market sentiment as well. Also, an upbeat reading on China's service sector activity boosted hopes of the economy continuing its economic recovery.
In individual stocks, Telecom Italia shares were up more than 2.0% amid the reports that the firm is close to agreeing on a landmark deal with U.S. fund KKR that could lay the groundwork for plans to create a single ultrafast broadband network. Nestle said it was buying U.S. peanut allergy treatment maker Aimmune Therapeutics, bolstering its health science portfolio. Nestle shares were 0.66% higher on Monday.
Against this backdrop, Italy’s FTSE MIB edges higher by 0.23 percent to 19,892, France’s CAC 40 gains 0.68 percent to 5,036, while German DAX 30 rises by 0.46 percent to 13,093. U.S. stock index futures advance ahead of the opening bell, with a host of Federal Reserve officials are set to speak this week, kicking off with Vice Chair Richard Clarida later today.
In currencies, the dollar is mixed after a sell-off witnessed on Friday. EURUSD has settled above the 1.19 figure but struggles to break a 1.1930 local resistance in thin trading. Once above this level, the pair could climb to long-term highs but a break above 1.20 looks unlikely at this stage. GBPUSD climbed to fresh 2020 highs earlier in the day and retreated since then and turned marginally lower on the intraday timeframes. Still, the pair remains above the 1.33 handle and could make another bull run as the greenback remains on the defensive.
In commodities, oil prices continue to climb on Monday, with Brent trading above the 200-DMA. However, the futures still refrain from breaking above the $46.50 resistance area that continues to cap the bullish tone in the market. Brent is bullish amid positive risk sentiment, stimulus hopes, and the outlook for economic recovery. Also, the market was supported by the reports that Goldman Sachs expects energy prices to rally in 2021.in the short term, oil prices need to hold above the $46 handle in order to retain a positive tone.
Nathan Lambert, Head of Global FX Analytical Department