European Market Open: Lower start ahead of busy day for the economic calendar
Joshua Warner February 18, 2021 2:10 AM
European markets are expected to open lower this morning ahead of a busy day for the economic calendar, which is headlined by central banks, US jobs data and European consumer confidence data.
- Reports suggest the UK economy could reopen quite quickly from April.
- Italy’s new prime minister Mario Draghi promises sweeping reforms to get the country back on its feet.
- The ‘Reddit rally’ testimonies have started in the US.
- Facebook cuts news from feeds in Australia in spat over paying for news content.
- The rally in oil prices has continued as the cold snap in Texas continues to cause disruption.
- The economic calendar sees US jobs data, European consumer confidence and central bankers take centre stage today.
FTSE 100 to open lower
The FTSE 100 is set to open slightly lower this morning at 6715.8.
European markets to open lower
France’s CAC 40 is set to open 0.2% lower today at 5775.8.
Germany’s DAX is called to open 0.2% lower at 13926.0 this morning.
When will the UK economy reopen?
Speculation is building about how quickly the UK economy could reopen ahead of prime minister Boris Johnson outlining his roadmap out of lockdown on Monday. He has said he wants this to be the last lockdown, but has admitted this makes him cautious about easing rules.
Reports suggest open air venues, everything from theme parks and zoos to golf and tennis, could reopen in April while pubs, bars and restaurants could have to wait until May before being allowed to fully reopen. Many leisure businesses may not return to normal until July, while office workers are not expected to head back to the office for some time.
Separate reports from Sky News, based on internal Whitehall documents, suggest hospitality businesses could be reopened as early as April and that entertainment and sporting facilities would follow in May. However, these are thought to be options the government is considering and not firm plans.
Netherlands poaches post-Brexit business from the UK
The Netherlands Foreign Investment Agency said hundreds of companies have relocated from the UK to establish post-Brexit bases to access European markets, with hundreds more considering making a move across the Channel.
A total of 78 ‘Brexit’ businesses moved to the Netherlands in 2020, according to the agency, in line with the number that moved in 2019. The agency said a record number of UK businesses, around 550 of them, are in discussions about moving to or expanding in the Netherlands.
Trading, finance, agriculture, medicines and logistics companies were among the sectors that have seen the most relocating happening since Brexit, the agency said.
Italy’s new prime minister Mario Draghi promises big changes
The new prime minister of Italy, Mario Draghi, has promised that his new coalition government will band together and introduce sweeping reforms to try and revive the economy and recover from the pandemic.
Draghi, the former boss of the ECB, made his first speech to the Italian parliament as prime minister and said his main priorities were the country’s vaccination programme and economic recovery.
‘Today we have, as did the governments of the immediate post-war period, the possibility, or rather the responsibility, to launch a new reconstruction,’ Draghi said.
He also showed his commitment to the EU and the euro.
‘Supporting this government means sharing the irreversibility of the choice of the euro, it means sharing the prospect of an increasingly integrated European Union that will arrive at a common public budget,’ Draghi said.
‘Reddit rally’ testimonies begin
Hedge fund managers, social media influencers and the chief executives of commission-free trading app Robinhood all delivered testimonies to US authorities on Wednesday defending their roles in the ‘Reddit rally’ earlier this year before they are questioned by lawmakers.
The Reddit rally saw stocks like GameStop, AMC Entertainment and even commodities like silver experience wild price movements as retail traders banded together on social media sites to target heavily shorted stocks.
The testimonies delivered yesterday argues there was no foul play. Robinhood has come under the most fire as the app was used by many of the Reddit traders, to the point the company had to suspend trading on several stocks because, it argues, of regulatory capital requirements.
Bosses at Melvin Capital Management and Citadel, two of the hedge funds squeezed on GameStop, also testified. Politicians have also called upon social media influencers like Keith Gill, better known as ‘Roaring Kitty’, and the boss of Reddit as part of its investigation.
Facebook blocks news content in Australia
Facebook has blocked users in Australia from viewing or sharing news content on its platform after the government introduced new rules requiring Big Tech firms to pay publishers for their news content used on the site.
All local and global news has been stripped from Facebook as of Thursday, leaving news feeds undernourished and sparking criticism from ministers, who say they were given no notice of Facebook’s plan. ‘Facebook was wrong, Facebook’s actions were unnecessary, they were heavy-handed, and they will damage its reputation here in Australia,’ Treasurer Josh Frydenberg said.
Notably, while Facebook has gone down the confrontational route, Google has decided to be more cooperative by striking deals with news publishers in recent days, including with Rupert Murdoch’s News Corp.
The new laws are expected to be formally approved over the coming days, but Facebook claims it ‘fundamentally misunderstands’ the relationship between news publishers and social media platforms.
Forex: Narrow movements
GBP/USD was trading slightly lower this morning at 1.38476.
EUR/GBP was up 0.1% at 0.86971 in early trade.
Commodities: Oil prices continue to rally
The rally in oil prices has continued as the cold snap in Texas continues to cause disruption to US oil output, with many wells and refineries still shut because of the weather and exports of the likes of natural gas being banned to ensure there is enough power for Texans.
Analysts at Wood Mackenzie believe around 1 million barrels of daily production is currently being lost as a result, and that it could be weeks until it fully recovers. The weather in Texas is expected to ease this weekend.
Brent was trading slightly higher at $64.58 a barrel this morning, with WTI trading at $61.52.
The concerns over supplies comes after the latest data showed US crude oil inventories continued to fall at a much faster rate than expected. The latest crude oil stocks fell by 5.8 million barrels in the week to February 12, when analysts were only expecting a 2.4 million barrel decline.
Today, there is the Energy Information Administration’s natural gas and crude oil stocks change data due to be released at 1530 GMT, providing an insight into the US market dynamics.
Plus, there are also reports that OPEC+ intends to ease production cuts after April so they can capitalise on higher prices after cutting output earlier this year.
Analyst Fiona Cincotta looks at the price action of WTI crude oil here
Gold traded 0.4% higher this morning at $1782 an ounce, while silver was down 0.8% at $27.17.
The economic calendar is quiet this morning, with the Bank of England’s Michael Saunders due to give a speech at 1100 GMT.
Activity picks up this afternoon, starting with the European Central Bank’s monetary policy meeting accounts at 1230 GMT. That is followed by a speech from the US Federal Reserve’s Lael Brainard at 1300 GMT and a slew of US data at 1330 GMT, including initial and continuing jobless claims, building permits, housing starts and the Philadelphia Fed manufacturing survey.
There is eurozone consumer confidence at 1500 GMT, and at 1615 GMT there is a speech from the ECB’s Isabel Schnabel.
This evening sees Australia’s PMI out at 2200 GMT and Japan’s CPI at 2330 GMT.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.