European Market Open: Stocks rise as recovery hopes remain intact

European markets are expected to open higher today, as countries continue their battle against the coronavirus to underpin hopes for a global economic recovery later this year.

Charts (4)

  • The UK is set to introduce tough new rules for travellers entering the country, while Germany considers extending its latest national lockdown.
  • Japan’s central bank is expected to review its asset-buying programme in March, as the country prepares to launch its vaccination programme next week.
  • US Senate pushes ahead with Trump’s impeachment trial
  • In forex, GBP/USD climbs to its highest level since April 2018.
  • In commodities, oil prices take a breather following a strong rally this month.


FTSE 100 to open higher

The FTSE 100 is set to open 0.2% higher today at 6569.0.


European markets to follow as CAC climbs to month-high

The Euro STOXX Index is called to open 0.1% higher at 3676.5 this morning.

France’s CAC 40 is set to open 0.3% higher at 5713.8 today – marking its highest level in over a month.

Germany’s DAX is called to open 0.2% higher at 14069.0 when markets open this morning.

Start trading the opportunities with indices today.


UK introduces tough new rules for travellers

Travellers entering the UK will face tougher rules next week as the country threatens large fines or even lengthy jail time to anyone breaking new measures that require people to quarantine in hotels after arriving in the country.

People entering the country from countries deemed at high risk will have to quarantine in hotels near airports from February 15, and pay around £1,750 to cover accommodation, food and testing. Failure to adhere to the new rules could land people a £10,000 fine or even time in prison.


German chancellor wants lockdown extended until March

German chancellor Angela Merkel is keen to extend lockdown restrictions designed to stop the spread of coronavirus until at least the start of March, Reuters reported.

Citing members of Merkel’s parliamentary group, the reports suggest the chancellor will be pushing for the country’s 16 states to back plans to extend restrictions until at least March 1 when she meets regional leaders today. Lockdown is currently due to end on February 15.  


UK-EU relations strained since Brexit

UK ministers have warned relations with the EU have been ‘bumpy’ since Brexit. There have been disputes between the two countries over a number of issues since the start of 2021, including over coronavirus vaccines, the status of diplomats, and the Northern Ireland protocol.

‘The EU is still adjusting somewhat to the existence of a genuinely independent actor in their neighbourhood,’ said David Frost, who advises the prime minister on EU affairs. ‘It is going to require a different spirit, probably, from the EU’.

Meanwhile, cabinet minister Michael Gove is due to meet the European Commission’s vice president Maros Sefcovic on Thursday to discuss issues about post-Brexit trade.

‘You sometimes get that increased level of turbulence, but then eventually you reach a cruising altitude and the crew tell you to take your seatbelts off and enjoy a gin and tonic and some peanuts,’ said Gove on UK-EU relations. ‘We’re not at the gin and tonic and peanuts stage yet, but I’m confident we will be’. ,


EU may introduce new sanctions against Russia

The EU has said new sanctions could be imposed on Russia after it decided to jail president Vladimir Putin’s biggest rival, Alexei Navalny.

Josep Borrel, a top EU diplomat, visited Russia last week and said the visit had cemented his view that the country wanted to break away from Europe and divide the West, claiming Russia has no interest in democracy.

‘The Russian government is going down a worrisome authoritarian route,’ Borrel said. ‘There seems to be almost no room for the development of democratic alternatives ... they are merciless in stifling any such attempts’.

The diplomat said targeted sanctions against Russia were now on the table but said I was up to EU member states what next steps they decide to take.


Draghi to propose cabinet ministers on Thursday

Mario Draghi is expected to report back to Italy’s head of state on Thursday to propose his list of cabinet ministers, as the former boss of the ECB continues to try to drum up support for a new government.

Reports suggest Draghi is gradually gathering support from a number of smaller parties, but the largest party in parliament – the anti-establishment 5-Star Movement – remains on the fence. The party postponed an online ballot of its members to decide the party’s stance late on Tuesday, casting doubt over whether the party will support Draghi’s new government.

Individuals in the party, including 5-Star leader Vito Crimi, have called for patience to get a better understanding of what policies Draghi backs and the make-up of any cabinet and ministerial positions before giving their support.


Japan to start vaccinating people next week

Japan’s prime minister Yoshihide Suga has said the country will begin vaccinating people against the coronavirus next week. Jabs will start to be given in the middle of next week, in-line with its goal to launch its vaccination programme in the middle of February.


Japan likely to review asset-buying programme in March

The Bank of Japan is likely to review its asset-buying programme in March in the hopes of making its stimulus plans more flexible and sustainable, according to one of the central bank’s board members Toyoaki Nakamura.

‘The BOJ’s ETF purchases ... will remain a necessary tool,’ Nakamura said. ‘But by buying huge amounts of assets and holding onto them for a prolonged period, the BOJ could affect market functions. That is something we need to be mindful of.’

Reuters, citing unnamed sources, reports that the bank intends to scale back its ETF-buying programme.


US pushes ahead with Trump impeachment but conviction unlikely

The US Senate voted in favour of continuing with former president Donald Trump’s impeachment trial yesterday, although there does not appear to be enough support from Republicans to get a conviction.

The Senate voted 56-44 to proceed with the trial, with only six Republicans siding with the Democrats. That is below the 17 Republicans needed to get a conviction, which requires the backing of two-thirds of the Senate, which is currently 50:50 split between the two parties.  


Twitter beats expectations with record revenue but user growth disappoints

US social media outfit Twitter posted record revenue and beat earnings expectations in the last quarter of 2020, capping off an ‘extraordinary year’, but disappointed in terms of user growth.

Revenue rose to $1.29 billion in the last three months of 2020, up 28% from the previous quarter and ahead of the $1.19 billion expected by markets. Adjusted earnings came in at 38 cents per share, higher than the 31 cents expected. However, monetizeable daily active users came in at 192 million, below the 193.5 million forecast by analysts.

Twitter said it expects revenue to grow faster than costs in 2021, and said revenue in the first quarter of 2021 should be in the range of $940 million to $1.04 billion – compared to analyst expectations of $965 million.


Forex: GBP/USD climbs to new high

GBP/USD was trading slightly higher this morning, building on big gains booked yesterday, at 1.38203 – marking its highest level since April 2018.

EUR/USD was trading 0.1% higher this morning at 1.21250.

Meanwhile, EUR/GBP was trading a smidgen higher this morning at 0.87746.

Start trading the opportunities in the forex market today.


Commodities: Oil prices take a breather after strong rise

Oil prices were holding steady this morning after rallying since the start of this month, spurred on by hopes that a global economic recovery will happen this year and that central banks and governments will continue to support their economies in the meantime. Production cuts by Saudi Arabia and other members of OPEC+ since the start of the year has also supported the view that a supply glut is slowly disappearing, demonstrated by recent data showing continued declines in inventories.

Brent was trading 0.4% lower this morning at $60.85 per barrel, while WTI was down 0.3% at $58.12.

City Index analyst Joe Perry conducts some technical analysis on WTI to consider where it could be headed, stating that prices may hinge on this week’s supply data. The US Energy Information Administration will release its latest oil stocks change figures at 1530 GMT.

Start trading the volatility in oil prices today.

Gold traded 0.3% higher this morning at $1844 per ounce.

Silver was also up 0.3% at $27.35 an ounce.

Start trading gold and other precious metals today.


Economic calendar: key events to watch out for today

The economic calendar is light this morning but gets busier this afternoon. The main event today is US CPI numbers at 1330 GMT.

Elsewhere, the ECB’s Fabio Panetta is due to make a speech at 1300 GMT while the BoC’s Timothy Lane will be speaking at 1630 GMT. The BoE’s governor Andrew Bailey will make a speech at 1700 GMT and the Fed’s chair Jay Powell will be speaking at 1900 GMT.

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.


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