European Stock Futures Higher; Silver Spotlight Relieves Pressure

Tradehay.com: 01/02/2021 - 11:15

European stock markets are seen opening higher Monday, rebounding after last week’s selloff as retail-inspired pressure on hedge funds lifts with silver in demand.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.8% higher, CAC 40 futures in France climbed 0.7% and the FTSE 100 futures contract in the U.K. rose 0.7%.

Global stocks posted their biggest weekly drop in around three months last week, partly on the turmoil fueled by retail traders organising over online forums to take on hedge funds by buying heavily-shorted stocks, such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC).

This pressure appears to have lifted, to a degree, Monday, as the focus of the newly-empowered day traders now seems to have shifted towards silver. The metal has jumped 6% to a six-month high, possibly limiting the need for distressed selling by these funds.

This positive start to the European day comes despite two PMI releases from China showing economic activity slowed in January as restrictions took a toll in some regions.

Manufacturing PMI data is scheduled for release in Europe later Monday, and this should detail a similar loss in economic momentum for this region as coronavirus lockdowns bite. German retail sales slumped 9.6% on the month in December.

There was some positive news on the U.K. vaccination program over the weekend, as government records showed a record number of Covid-19 vaccines were administered on Saturday, bringing the total number of people to have received their first dose to just short of 9 million.

The rollout of vaccines throughout most EU countries has been less impressive, prompting a diplomatic spat late last week when the EU Commision announced it would impose export controls on vaccines, potentially creating a border between Northern Ireland, part of the United Kingdom, and EU member Ireland.

This decision was quickly reversed, but is indicative of the mistrust between the two sides after the tempestuous long-running Brexit talks.

Elsewhere, President Joe Biden’s $1.9 trillion Covid relief package is still trying to make it through Congress, and could suffer further delays after a group of Republican senators sent the President a letter on Sunday, urging him to consider a scaled down proposal. 

Back in Europe, results from the likes of Julius Baer (SIX:BAER) and Banco de Sabadell (MC:SABE) will be in focus, as well as numbers from low-cost airline Ryanair (LON:RYA). Oil major BP (NYSE:BP) will also be in the spotlight after it agreed a 20% stake in its Oman interest for $2.6 billion.

Oil prices edged higher Monday, boosted by virus infections falling in some areas, more vaccines proving successful in trials as well as output cuts by Saudi Arabia.

However, patchy coronavirus vaccine rollouts and the speed of transmission by new variants of the virus are limiting the price gains.

U.S. crude futures traded 0.3% higher at $52.36 a barrel, while the international benchmark Brent contract rose 0.6% to $55.33. 

Elsewhere, gold futures rose 0.8% to $1,864.70/oz, while EUR/USD traded 0.1% lower at 1.2121.