European Market Open: Mixed start despite growing optimism about vaccines

Optimism continues to grow about a global economic recovery this year as a number of countries aim to vaccinate their populations and start to reopen their economies.

Charts (3)

  • The UK could fully vaccinate its population by September, German investors are confident an economic recovery is round the corner, the US has promised to ‘go big’ on stimulus plans to help the country bounce back, and Japan has launched its vaccination programme.
  • A data dump this morning showed UK inflation edged up in January.
  • Bitcoin surges past the $50,000 mark for the first time, driven by adoption by big business.
  • In commodities, oil prices continued to edge higher on supply concerns.
  • The main event in the economic calendar to watch is US retail sales at 1330 GMT.

FTSE 100 to open flat

The FTSE 100 is set to open broadly flat this morning at 6763.0.

European markets to see mixed open

France’s CAC 40 is set to open down 0.1% at 5786.0 this morning.

Germany’s DAX is called to open 0.1% higher at 14066.0.

Start trading the opportunities with indices today.

UK inflation ticks up in January

UK inflation rose to 0.7% in January from 0.6% in December, driven by higher prices in a number of sectors.

The Consumer Price Index ticked up 0.9% in the 12 months to January compared to 0.8% reported in December when owner occupier’s housing costs were included.

‘Furniture and household goods, restaurants and hotels, food, and transport had the largest upward contributions to the change in the January 2021 12-month rate, while falling clothing and footwear prices had a downward effect,’ said the Office for National Statistics.

Can the UK provide two doses to all adults by September?

The UK could provide two doses of coronavirus vaccines to all adults by August or September, according to the country’s vaccine taskforce.

Clive Dix, who is leading the group that helped form the UK’s procurement strategy for vaccines, told Sky News that the country had benefited from quickly buying jabs from several manufacturers and that more would be approved in the coming months to help fill any gaps in production from the likes of AstraZeneca or Pfizer.

Dix said every adult could be given two doses of a vaccine by August or September, ‘maybe sooner if we need to.’

‘We’ve got to deliver just over 100 million doses of vaccine and I believe we should be able to do that. I’m not in deployment so I can’t look at the numbers of when they will be. But if they need to be deployed by then, we’ve got the vaccine to do that,’ said Dix.

Separately, Sky News reported that the UK is planning to introduce surge testing nationwide to try to prevent variants from spreading. The plans are expected to be announced as part of prime minister Boris Johnson’s roadmap out of lockdown that will be unveiled next week.

German investor morale rises on optimistic outlook

The latest data from the ZEW economic research institute has shown investor morale in Germany rose higher than expected during February on hopes that consumption and spending will surge when the economy is reopened.

The survey said investor’s economic sentiment came in at 71.2 points compared to 61.8 in January. That was markedly better than the 59.6 expected by a Reuters poll.

‘The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months,’ said ZEW president Achim Wambach.

‘Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations,’ he added.

Germany’s current lockdown was recently extended but is due to end on March 7, with chancellor Angela Merkel vowing that it won’t be in place any longer than is necessary.

Biden says ‘now’s the time to go big’ for US

US president Joe Biden has echoed sentiments from Treasury secretary Janet Yellen by stating the country needs to ‘go big’ with his $1.9 trillion stimulus plan to help the economy recover from the pandemic.

The comment came as Biden outlined his ambitions on a wide range of topics in a televised broadcast, during which he discussed the pandemic, the relationship with China, race equality and policing.

Biden said he hopes every American will be offered a jab by July but said measures like social-distancing and masks were going to be around for the foreseeable future.

Japan begins coronavirus vaccine programme

Japan has started to inoculate its population against the coronavirus as it launched its vaccine programme with the Pfizer jab in Tokyo. Workers ar the Tokyo Medical Centre were among the first to be vaccinated and will be followed by around 3.7 million more medical personnel and then 3.7 million people over the age of 65.

It means Japan is the last of the G7 countries to start vaccinating its population.

Forex: Bitcoin passes $50,000 for first time

GBP/USD was trading broadly flat from yesterday’s close at 1.38825 this morning.

EUR/GBP was down 0.1% in early trade at 0.87010.  

Meanwhile, EUR/USD was down 0.1% at 1.20798.

Elsewhere, analyst Joe Perry ponders whether the South African rand could be the next short squeeze target and has a look at the fundamentals and technicals of USD/ZAR.

Bitcoin was trading 0.3% lower this morning at $50,410, having broken through the $50,000 mark for the first time yesterday. This rise is underpinned by news of Tesla’s $1.5 billion investment in the cryptocurrency and reports that big US banks like Morgan Stanley and JPMorgan could follow BNY Mellon’s entry into the market by also taking the plunge by deploying money into Bitcoin. Have a look at some technical analysis on Bitcoin following the milestone moment.

Start trading the opportunities in the forex market today.

Commodities: Cold snap in Texas adds to oil supply concerns

The recent drive higher in oil prices has been encouraged by supply issues. A wave of cold weather has hit wells and refineries in Texas, the largest-producing state in the US, which analysts at ANZ and Citigroup believe could have curtailed 2 million barrels of daily shale production and disruption to refineries.

There are also growing concerns about tensions in the oil-rich Middle East. Saudi Arabia-backed soldiers and Iran-backed forces in Yemen have had several encounters lately, causing concerns that supplies could be disrupted.

However, countering those fears over supply are reports that OPEC+, which has cut output this year to help support prices, will start to ease reductions in output after April to capitalise on higher prices, Reuters reports. Saudi Arabia, the world’s largest oil producer, agreed to cut 1 million barrels from its daily production but that is due to end next month.

Brent was trading 0.3% higher in early trade at $63.44 a barrel, while WTI was also up 0.3% at $60.27.

The US API weekly crude oil stock data will be released at 2130 GMT today. Forecasts suggest markets are expecting a decline in crude oil stocks of around 2.2 million barrels in the week to February 12.

Start trading the volatility in oil markets today.

Gold traded broadly flat at $1793 per ounce this morning, while silver was also trading flat at $27.31.

Economic calendar: key events to watch out for today

The headline event in the economic calendar is US retail sales at 1330 GMT and the FOMC minutes being released at 1900 GMT.

Elsewhere, there is CPI numbers out from the Bank of Canada at 1330 GMT.

Look at all the scheduled events for today using our economic calendar, and stay up to date with the latest news and analysis here.

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