European stock markets opened mostly higher but failed to preserve the bullish bias and gave back earlier gains amid the lingering concerns over the coronavirus resurgence worldwide that outweighed some optimism from signs of progress on fresh U.S. government stimulus efforts. Germany reported 633 new virus cases and another 4 deaths today, with RKI warning that the rise in German coronavirus cases is affecting many states.
On the data front, UK July CBI retailing reported sales came in at +4 versus -25 expected. The Ifo institute said its index tracking export expectations in the German manufacturing sector rose to 6.9 points in July from -2.2 the previous month. As for corporate results, Peugeot reported a surprise profit for the first half of the year, pushing the French automobile maker stocks 2.7% higher.
Against this backdrop, the UK’s FTSE 100 adds just 0.02 percent to 6,106. Italy’s FTSE MIB edges lower by 0.99 percent to 19,821, France’s CAC 40 loses 0.68 percent to 4,906, while German DAX 30 declines by 0.37 percent to 12,790. U.S. stock index futures are edging lower before the opening bell despite the GOP outlined its new coronavirus stimulus plan late Monday.
In currencies, EURUSD corrected slightly lower amid the easing selling pressure surrounding the greenback. The pair faced local support around 1.17 and trimmed earlier losses, suggesting the recovery potential in the dollar is limited while bearish risks persist. The euro also derived some support from strong economic data out of Germany. Should the prices extend the retreat any time soon, the 1.15 area could act as an attractive entry point for bulls. However, it looks like the common currency will resume the rally earlier.
Meanwhile, oil prices continue to oscillate around the $44 figure, with the market staying directionless amid a lack of significant industry drivers. On the one hand, the upside potential is limited by lingering worries about the spreading coronavirus that makes traders doubt the recovery in global energy demand. On the other hand, the falling dollar helps Brent to stay afloat amid the unstable and fragile environment in the global stock markets. Considering the remaining risk factors for high-yielding assets in general, the path of least resistance for Brent is to the downside at this stage.
Nathan Lambert, Head of Global FX Analytical Department