European Market Open: FTSE 100 to rise on hopes of faster UK growth

European markets are set to rise this morning as confidence grows about the progress being made with vaccines in the UK and Europe, oil and gold are on the move as the crisis in India deteriorates, and the Turkish lira slides toward an all-time low against the dollar.

Charts (4)

FTSE 100 set to open higher

The FTSE 100 is called to open 0.2% higher this morning at 6932.0 after ending last week at 6917.4.

European markets to follow higher

The Euro STOXX Index is set to open 0.2% higher today at 4013.5 from 4005.6 at the end of play last week.

France’s CAC 40 is called to open 0.1% higher at 6262.1 from 6256.5 at the last close.

Germany’s DAX is set to open 0.2% higher at 15282.5 from 15256.4 when markets closed on Friday.

Goldman Sachs forecasts faster growth for the UK

Britain's economy is expected to grow by a ‘striking’ 7.8% in 2021, according to a note released by Goldman Sachs yesterday, outpacing the US as its vaccination programme progresses.

The bank said UK growth was ‘above our expectations for the US’. The forecast also sits above the 5.3% estimate by the International Monetary Fund, but the UK has now vaccinated over half its adult population since that was made. Goldman Sachs highlighted the stronger-than-expected flash PMI and retail sales numbers for April.

The deputy governor of the Bank of England, Ben Broadbent, said on Saturday that he expected ‘vary rapid growth at least over the next couple of quarters’ as restrictions are lifted.

Pressure builds for greater transparency over Covid-19 vaccines

Lawmakers in the UK are calling on the government to publish all communications it has had with pharmaceutical firms to understand if lobbying has influenced its opposition to a waiver of intellectual property rights on Covid-19 vaccines.

The US, UK and a handful of other countries have blocked negotiations at the World Trade Organisation, where over 100 countries have supported a proposal that would prevent pharmaceutical firms from owning IP rights over their vaccines to ensure developing countries can produce the jabs they need.

A cross-party group of UK lawmakers are now calling for prime minister Boris Johnson, ministers and senior civil servants to publish all communications with pharmaceutical firms to improve transparency.

EU set to welcome vaccinated Americans this summer

The European Union will allow Americans that have been vaccinated against the coronavirus to travel to Europe by this summer.

European Commission president Ursula von der Leyen said the bloc will unconditionally allow all Americans that have been vaccinated with jabs that have been approved by the European Medicines Agency to travel across the region, but did not provide a specific timeframe when travel could restart.

The news comes as the head of the EU’s vaccine task force said the bloc was hoping to immunise its own population by having 70% of adults vaccinated by mid-July.

Italy reaches deal with EU on recovery plan

Italy and the EU have reached agreement over the country’s recovery plan, prime minister Mario Draghi told his cabinet over the weekend, putting it on course to be approved by the bloc before the end of April.

Italy is planning on spending more than EUR220 billion in EU national funds to help its economy recover after being ravaged by the coronavirus, according to Reuters. Draghi said there were some ‘marginal adjustments’ to be made but that he had been given the green light.

Forex: Lira and dollar on the move

USD/TRY edged close to an all-time high on Monday as the slide in the Turkish Lira continued over the weekend. This was driven by concerns over US-Turkey relations and by comments from the country’s new central bank boss, who said monetary policy would remain tight for now as hiking interest rates would send a bad message to the economy. USD/TRY was trading at 8.43138 this morning compared to 8.40906 on Friday.

Meanwhile, the dollar lost ground against the likes of the euro and sterling ahead of the US Federal Reserve meeting later this week. Speculation is building that chairman Jerome Powell will shun the idea of tapering bond purchases as it is too soon to be discussing easing monetary policy despite the progress being made with the vaccination programme and an improving labour market.

GBP/USD was up 0.2% this morning at 1.39008 from 1.38796 when stock markets closed on Friday, while EUR/USD was up 0.1% at 1.21086 from 1.20974.

Commodities: Oil dips and gold rises as crisis in India worsens

Brent traded at $65.26 a barrel this morning after ending last week at $65.74 a barrel, while WTI dipped to $61.75 from $62.14. The slightly softer prices come as improving sentiment over the recovery for oil this year as vaccination programmes progress has been dented by the deteriorating situation in India, which set a new global record for daily coronavirus cases over the weekend.

Gold prices were trading 0.3% higher this morning at $1780.8 from $1776.4 per ounce at the end of play on Friday. Prices were boosted by the weaker dollar and increased demand ahead of the US Federal Reserve’s meeting later this week.

Economic calendar: key events to watch out for today

The economic calendar kicks off in Germany today, with IFO business sentiment data due out at 0900 BST. The European Central Bank’s Fabio Panetta is due to make a speech at 1300 BST, followed by Philip Lane at 1400 BST.

There is US durable goods and non-defence capital goods orders at 1330 BST.

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