European stocks edge higher ahead of Fed Minutes

The news shaping the markets today

US President Joe Biden made his first visit to Ukraine since the war and announced additional assistance of half a billion dollars. The safe-haven US dollar index rose this morning.

Singapore’s current account surplus narrowed to S$23.52 billion in the fourth quarter, from S$27.52 billion in the year-ago period, exerting pressure on the SGD/USD forex pair.

Japan’s au Jibun Bank manufacturing PMI declined to 47.4 in February, versus a final reading of 48.9 a month ago, which sent the JPY/USD pair lower in forex trading this morning.

Australia’s Judo Bank services PMI rose to 49.2 in February, versus 48.6 in the previous month. However, this being the fifth straight month of contraction in the country’s services activity exerted pressure on the AUD/USD forex pair.

New Zealand’s producer input prices increased 0.5% in the three months to December, compared to a 0.8% rise in the previous quarter, which sent the NZD/USD pair slightly lower in forex trading this morning.

What’s happening: European stocks rose on Monday in a choppy trading session.

What happened: With US markets remaining closed on Monday for the Presidents’ Day holiday, investors assessed economic reports from the Eurozone.

Markets await the minutes from the latest US Federal Reserve meeting, due for release on Wednesday.

Why it matters: The pan-European index defied US and Asian markets to record gains last week, despite moving lower on Friday. Investor sentiment was supported by a strong forecast for the region’s economy and upbeat earnings reports from major companies.

The STOXX Europe 600 index jumped to a one-year high, while the FTSE 100 and CAC 40 indices hit record highs last week.

Investors monitored economic data released on Monday, which showed consumer confidence in the Eurozone rising by 1.7 points to a reading of -19 in February, the strongest level in a year. Although consumer confidence improved for four months in a row, it remains below the long-term average, the European Commission said.

Eurozone’s construction output fell 1.3% year-over-year in December, versus a 1.6% increase in the prior period. This marked the first monthly contraction since December 2021.

Trading volumes remained subdued on Monday due to a holiday in the US, with investors weighing hawkish remarks from Fed officials.

The STOXX Europe 600 Index rose 0.07% to close at 464.64 on Monday, after swinging between gains and losses for most of the session. Mining stocks were among the top performers, gaining around 2.5%, while tech stocks lost 0.5%.

London’s FTSE 100 added 0.12% to reach 8,014.31, amid gains in stocks of materials and financials. Germany’s DAX 40 slipped 0.04% to 15,477.55, while France’s CAC 40 fell 0.16% to settle at 7,335.61 on Monday.

What to watch: Investors await economic reports on manufacturing PMI, services PMI, composite PMI and ZEW economic sentiment index from the Eurozone today. The S&P Global Eurozone manufacturing PMI is expected to improve to 49.5 in February, from 48.8 in January, while the services PMI is projected to rise to 51.5, from the previous reading of 50.8. The ZEW Indicator of Economic Sentiment for the Eurozone, which climbed by 40.3 points to 16.7 in January, is expected to improve further to 18.5 in February.

The markets today

The Canadian dollar will be in focus today ahead of a couple of major economic reports

Context: The CAD/USD forex pair edged higher on Monday with non-US assets getting some respite due to the closure of markets in the US.

Details: The US dollar, which is on course to record its biggest single-month gain since September 2022, traded almost flat on Monday, as US markets remained closed for the Presidents’ Day holiday.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, traded at 103.86 on Monday.

A rise in the price of crude oil, one of Canada’s major exports, also provided some support to the loonie during the session. WTI crude oil prices snapped a five-session losing streak on Monday.

At its latest meeting, the Bank of Canada raised its key interest rate to 4.5%, the highest level in 15 years. After raising interest rates by 425 basis points over 10 months, the central bank signalled to halt rate hikes for now.

Canada’s inflation rate eased to 6.3% in December, although it is still well above the BoC’s 2% target.

What are expectations: The release of data on Canada’s inflation rate and retail sales will remain in focus today. Canada’s annual inflation rate, which declined to 6.3% in December, is expected to ease further to 5.9% in January. Analysts expect Canada’s retail sales to grow 0.5% in December.

Other Markets: Asian markets closed mixed on Monday, with the Shanghai and Sensex indices rising by 0.10% and 0.38%, respectively, and the Asia Dow, Nikkei 225, and Hang Seng down by 0.60%, 0.16% and 0.99%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Saudi Arabia’s balance of trade, European Union’s new passenger car registrations, South Africa’s leading business cycle indicator, UK’s public sector net borrowing, CBI industrial trends orders, manufacturing PMI, services PMI and composite PMI, France’s manufacturing PMI, services PMI and composite PMI, Germany’s manufacturing PMI, services PMI, composite PMI, ZEW indicator of economic sentiment and ZEW indicator of current conditions, Mexico’s retail sales and government budget value, as well as US manufacturing PMI, services PMI, composite PMI and existing home sales.