European stocks opened lower on Thursday but managed to pare losses and turned slightly positive in recent trading as risk aversion has abated somehow. On the negative side, delays in economic aid and rising coronavirus cases continue to unnerve global investors, pushing high-yielding assets down. Worries about the U.S. presidential election also adding to the negative tone among investors. on this front, the U.S. accused Iran and Russia of interfering in the coming election, adding to geopolitical tensions.
As for the data, the German consumer confidence index for November arrived at -3.1 points versus 1.7 in the previous month. In the UK, CBI trends total orders came in at -34 in October versus -50 expected. Meanwhile, BOE's chief economist, Andy Haldane said that UK household spending has been remarkably resilient. Also, according to the latest reports, UK finance minister Sunak announced additional support for businesses. Elsewhere, China said it will make a necessary response after the US designates six more Chinese media outlets as foreign missions.
Against this backdrop, the UK FTSE 100 index adds 0.07% to 5,816, Italy’s FTSE MIB gains 0.12 percent to 19,108, France’s CAC 40 edges higher by 0.17 percent to 4,862, while the German DAX 30 recovers by just 0.03% to 12,562. U.S. stock index futures point to a lower open as investors keep an eye on negotiations in Washington over a fresh stimulus bill, also paying attention to quarterly earnings. Tesla Inc. rallied in pre-market trading after the carmaker reported a fifth consecutive quarter of profits.
In currencies, the USD index bounced from fresh lows and regained some ground on Thursday. After peaking at 1.1880 yesterday, EURUSD dipped to 1.1820 where the intermediate support arrives. Rising tensions between the US and China and uncertainty ahead of the US presidential election keep a lid on the high-yielding euro. If the ongoing bullish attempt in the greenback gathers further steam, the next support emerges at 1.18. Once below this level, the downside correction could be accelerated. Looking at the broader scenario, the euro remains bullish as long as the pair stays above the 100-DMA at 1.1625.
In commodities, oil prices continue recovery attempts after climbing above the $42 handle. In recent trading, Brent crude managed to exceed the 20-DMA and could target the 100-DMA around $42.80 if the momentum persists. Considering the unstable risk sentiment and the persisting worries about demand, it looks likely the futures will attract sellers at more robust bullish attempts. Furthermore, both Russia and Saudi Arabia highlighted the uncertain demand outlook given COVID-19's resurgence.
Nathan Lambert, Head of Global FX Analytical Department