Europe Expected to Drift Lower As Reopening Optimism Fades
Reopening optimism is showing signs of fading with European stocks pointing to a lower open following a day of strong gains
Share this:
Reopening optimism is showing signs of fading with European stocks pointing to a lower open following a day of strong gains. The same stubborn optimism that saw Asian stocks creep up to 4-month highs overnight is not being felt here in Europe. A quiet economic calendar will leave risk sentiment in the driving seat. However, the mixed performance of risk catalysts is confusing investors.
Whilst Boris Johnson announced the easing of more lockdown restrictions as from 4th July, the reduction of the 2-meter rule to 1 meter is unnerving investors following harsh criticism from scientists. Reducing that distance just by one meter increases the chances of getting the infection 10-fold, making localised flare ups and a second wave increasingly more likely.
Coronavirus news has been far from good on a global scale. Several states in the US continue to see record daily rises, whist the death toll is South America has topped 100,000. Yet investors assume that there is a small chance of a second lockdown on the scale of what we have just experienced.
Coronavirus news has been far from good on a global scale. Several states in the US continue to see record daily rises, whist the death toll is South America has topped 100,000. Yet investors assume that there is a small chance of a second lockdown on the scale of what we have just experienced.
PMI data pointed to resilience in economies
Data in the previous session has show that economies across Europe have been particularly resilient with business activity picking up across the board. PMI data for the UK showed that the contraction in service sector and manufacturing activity slowed as the sectors continued to rebound from the April nadir. France, outperformed showing that the easing of lockdown measures had resulted in business activity quickly returning to expansion.
Data in the previous session has show that economies across Europe have been particularly resilient with business activity picking up across the board. PMI data for the UK showed that the contraction in service sector and manufacturing activity slowed as the sectors continued to rebound from the April nadir. France, outperformed showing that the easing of lockdown measures had resulted in business activity quickly returning to expansion.
German IFO business sentiment data in focus
The economic calendar in Europe is quiet today. German IFO business sentiment for June is under the spotlight. Optimism is seen recovering further this month to 85, fromb79.5 in May. The assessment of the current situation is also seen improving from 78.9 to 84. The market mood could suffer a setback should the figures disappoint. A strong reading could see EUR/USD test resistance at $1.1422.
The economic calendar in Europe is quiet today. German IFO business sentiment for June is under the spotlight. Optimism is seen recovering further this month to 85, fromb79.5 in May. The assessment of the current situation is also seen improving from 78.9 to 84. The market mood could suffer a setback should the figures disappoint. A strong reading could see EUR/USD test resistance at $1.1422.
Oil extends slide, EIA data in focus
Oil is extending losses from the previous session after US crude stockpiles grew by more than expected, fuelling concerns over oversupply. Crude inventories rose by a larger 1.7 million barrels last week, according to the American Institute of Petroleum, significantly ahead of the 300,000-build forecast. EIA data will be keenly awaited today.
Oil has had a good run, rallying over 4% in just 3 days prior to yesterday’s data. The significant build in inventories was seen as a good catalyst to book profits. On Tuesday oil had been trading at its highest level since prices collapsed in early March.
FTSE Chart
Reopening optimism is showing signs of fading with European stocks pointing to a lower open following a day of strong gains. The same stubborn optimism that saw Asian stocks creep up to 4-month highs overnight is not being felt here in Europe. A quiet economic calendar will leave risk sentiment in the driving seat. However, the mixed performance of risk catalysts is confusing investors.
Whilst Boris Johnson announced the easing of more lockdown restrictions as from 4th July, the reduction of the 2-meter rule to 1 meter is unnerving investors following harsh criticism from scientists. Reducing that distance just by one meter increases the chances of getting the infection 10-fold, making localised flare ups and a second wave increasingly more likely.
Coronavirus news has been far from good on a global scale. Several states in the US continue to see record daily rises, whist the death toll is South America has topped 100,000. Yet investors assume that there is a small chance of a second lockdown on the scale of what we have just experienced.
Coronavirus news has been far from good on a global scale. Several states in the US continue to see record daily rises, whist the death toll is South America has topped 100,000. Yet investors assume that there is a small chance of a second lockdown on the scale of what we have just experienced.
PMI data pointed to resilience in economies
Data in the previous session has show that economies across Europe have been particularly resilient with business activity picking up across the board. PMI data for the UK showed that the contraction in service sector and manufacturing activity slowed as the sectors continued to rebound from the April nadir. France, outperformed showing that the easing of lockdown measures had resulted in business activity quickly returning to expansion.
Data in the previous session has show that economies across Europe have been particularly resilient with business activity picking up across the board. PMI data for the UK showed that the contraction in service sector and manufacturing activity slowed as the sectors continued to rebound from the April nadir. France, outperformed showing that the easing of lockdown measures had resulted in business activity quickly returning to expansion.
German IFO business sentiment data in focus
The economic calendar in Europe is quiet today. German IFO business sentiment for June is under the spotlight. Optimism is seen recovering further this month to 85, fromb79.5 in May. The assessment of the current situation is also seen improving from 78.9 to 84. The market mood could suffer a setback should the figures disappoint. A strong reading could see EUR/USD test resistance at $1.1422.
The economic calendar in Europe is quiet today. German IFO business sentiment for June is under the spotlight. Optimism is seen recovering further this month to 85, fromb79.5 in May. The assessment of the current situation is also seen improving from 78.9 to 84. The market mood could suffer a setback should the figures disappoint. A strong reading could see EUR/USD test resistance at $1.1422.
Oil extends slide, EIA data in focus
Oil is extending losses from the previous session after US crude stockpiles grew by more than expected, fuelling concerns over oversupply. Crude inventories rose by a larger 1.7 million barrels last week, according to the American Institute of Petroleum, significantly ahead of the 300,000-build forecast. EIA data will be keenly awaited today.
Oil has had a good run, rallying over 4% in just 3 days prior to yesterday’s data. The significant build in inventories was seen as a good catalyst to book profits. On Tuesday oil had been trading at its highest level since prices collapsed in early March.
FTSE Chart
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
WTI crude squeezed between Hormuz risk and diesel ban speculation
WTI is being pulled in opposite directions as Hormuz risk collides with growing political pressure over US diesel prices.
Why Crude Oil Slid While Middle East Tensions Kept Building
The crude oil pullback from monthly highs is running ahead of the headlines, as WTI and Brent ease while Middle East tensions stay unresolved.
Crude Oil Analysis: Geopolitical Risk Continues to Drive the WTI Barrel Higher
During recent trading sessions, a new wave of buying momentum has continued to gain relevance around WTI crude oil price action. Over the last three trading sessions, the market has maintained a bullish streak and is now up more than 5.5%, highlighting significant buying pressure in the short term.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.