EU markets recover, US stocks head for a lower open 

European stocks were trading slightly higher today, with a slowing in new coronavirus cases. The major indices inched higher, even as the shares of Europe’s two largest steel giants melted due to declining demand.

The Stoxx Europe 600 had gained 0.32% to reach 340.79 at 10:30 am GMT, while Germany’s DAX 30 was trading higher by 0.15% at 10,840.91 and Spain’s IBEX 35 was up 1.13% at 6,741.10. UK’s FTSE 100 had risen by 0.78% to 5,985.99.

European indices rose, despite steel heavyweights Thyssenkrupp and ArcelorMittal reporting massive losses. Thyssenkrupp’s shares plummeted around 12% and ArcelorMittal’s stock shed almost 4%.

Investors shrugged off news of South Korea battling with the second wave of infection and focused on Deutsche Bank-compiled data showing a deceleration in the growth rate of new virus cases globally from the earlier recorded 2.9% to 1.8%.

Optimism is high as major economies gradually reopen after stringent lockdown orders. Although the biggest eurozone members, including Spain, France, and Portugal, remain mostly closed, Eastern European countries, Australia and the US have opened up the most.

While the economic calendar is light today, the US reported the NFIB Business Optimism Index for April at 90.9. Although this is down from the previous month’s 96.4 reading, it is much better than the consensus forecast of 80. 

US stock futures point towards a slightly lower open on Wall Street. This could be due to profit taking, with the Nasdaq 100 and S&P 500 rising yesterday. In fact, yesterday marked the sixth consecutive day and longest winning streak this year for the tech-heavy Nasdaq composite, which rose 0.78% to close trading at 9,192.34 and is up 2.4% for the year.

NZD/USD

The Kiwi is trading close to 0.6110 and remains bullish today, after a sharp sell-off during the previous session. The pair came under pressure yesterday not only due to the greenback gaining strength, but also New Zealand aggravating China by extending support to Taiwan’s inclusion in the WHO. China is New Zealand’s second-largest trading partner and their relationship has been rocky of late. While New Zealand is reopening faster than other economies, the pair has failed to test April’s high of 0.6176 this month. The fate of the pair hinges on the Reserve Bank of New Zealand’s interest rate decision and on the performance delivered by Wall Street.

GBP/USD

The Cable delivered a brief rally to cross the 1.2400 marks yesterday, only to retreat quickly and has remained range bound since then. Volatility has been low since April, with the pair being unsuccessful in breaking the 200-day SMA. The pair faces strong support at 1.2260 and resistance at 1.2435. The near-term movement in GBP/USD will be influenced by CPI data from the US today and UK’s GDP data scheduled for release tomorrow.

USD/JPY 

The pair seems poised to extend gains but could meet the next technical barrier at 108.775. Any decline in the pair below 106.995 may be the pivot point for the day, triggering higher buying activity and keeping the pair on an upward momentum throughout the day. The US dollar could gain strength if the tech-heavy Nasdaq Composite continues rising for the seventh consecutive day today.