European stock markets opened higher on Thursday but turned mixed as concerns over geopolitics and pandemic resurfaced after a brief pause. Initially, the upbeat sentiment was driven by the German software giant SAP that signaled a rebound in its business from a coronavirus hit. The firm confirmed its full-year outlook and said business activity gradually improved in the second quarter. SAP shares rallied over 7% in the news headlines. Also on the positive side, the European Commission has secured deals for experimental treatments from both Merck and Roche.
However, investors continue to express a cautious tone amid the persistently rapid spread of the coronavirus in the U.S., where the number of cases surpassed the 3 million mark on Wednesday. Today, Hong Kong reported the highest daily jump in local coronavirus cases since the pandemic began. As a result, local authorities decided to tighten virus restrictions starting from 11 July. Elsewhere, the ECB's Villeroy highlighted that the central bank was ready to be innovative with policy tools if needed.
Against this backdrop, the UK’s FTSE 100 sheds 0.56 percent to 6,121. Italy’s FTSE MIB edges lower by 0.73 percent to 19,753, France’s CAC 40 loses just 0.03 percent to 4,979, while German DAX 30 rises by 1.15 percent to 12,638. U.S. stock index futures keep little changed ahead of North American trading.
In currencies, dollar demand seems to be resurging again, with the overall dynamics looks mixed amid the lingering uncertainty. The euro failed to confirm the recent breakout and retreated from the 1.1370 area and is now little changed for the day. US jobless claims data could affect the EURUSD pair today, and strong figures may lift the greenback amid further signs of economic recovery. In the longer term, the common currency could regain the 1.14 barrier if investor sentiment shows sustainable improvements.
In commodities, oil prices are marginally higher above $43 on Thursday. Brent retains a mild bullish tone these days but the current ascent lacks credibility and bullish momentum which is not surprising given choppy investor sentiment in the global financial markets. Also, according to the latest reports, a Kremlin spokesperson said that Russia currently has no plans to hold talks with Saudi Arabia ahead of next week's joint OPEC+ ministerial monitoring committee meeting. Lack of Moscow’s interest in some additional discussions is somehow negative for the market but the overall risk sentiment remains the main driver for crude oil these days.
Nathan Lambert, Head of Global FX Analytical Department