European stock markets retreat on Thursday in thin trading conditions on the last day of the year. British stocks are leading the losses as the U.K. leaves the European Union’s single market and customs unions in a few hours after the U.K. House of Commons on Wednesday voted to ratify the U.K.-EU trade deal concluded last week. Meanwhile, investors in London focused on another layer of strict measures announced by the government amid the pandemic. Also, on the negative side, the United States had raised tariffs on some EU products, which dampened market sentiment.
In individual stocks, the shares of AstraZeneca are down over 1% on Thursday after a top Trump administration official indicated that Americans wouldn’t get the vaccine before April, citing the remaining doubts about its effectiveness. As the U.S. government said it would raise tariffs on EU products including aircraft components and wines from France and Germany, Airbus, Safran and Pernod Ricard stocks fell about 1%.
Against this backdrop, the FTSE 100 in London sheds 1.18% to 6,478, while France’s CAC 40 is down by 0.22% to 5,587. US stock index futures were little changed Thursday morning after the major indexes closed with slim gains overnight.
In currencies, the dollar stays on the defensive on the last trading day of 2020. EURUSD jumped to fresh April 2018 highs above 1.2300 before retreating slightly. GBPUSD rose to fresh 31-month tops beyond mid-1.3600s, targeting the 1.3700 figure. USDJPY has been flirting with the 103.00 figure since yesterday, threatening March lows. The release of US Initial Jobless Claims for the week ended December 25 will hardly affect market sentiment as traders are leaving markets for a holiday.
Meanwhile, oil prices continue to tread water above the $51 handle in thin trading conditions. Brent gained marginally on Wednesday amid a weaker dollar and positive risk sentiment nearly across the board. Besides, the American Petroleum Institute reported a draw in crude oil inventories of 4.785 million barrels for the week ending December 25. On the other hand, gains continue to be capped by OPEC's plans to gradually increase oil production after the start of the year despite lockdowns and depressed demand.
Nathan Lambert, Head of Global FX Analytical Department