European equity markets were positioned for a flat opening on Tuesday as a period of significant growth gave way to investor hesitation.
While the previous two sessions saw strong gains fueled by positive corporate earnings and a jump in Eurozone investor sentiment for February, market participants have shifted their focus to upcoming US economic reports. These data points are expected to be critical in shaping future Federal Reserve interest rate decisions.
Locally, the day’s agenda includes the release of French labor statistics and industrial production figures from Turkey, which will provide further insight into regional economic health.
The corporate landscape also contributed to the morning’s cautious atmosphere. Standard Chartered made headlines with the unexpected departure of CFO Diego De Giorgi, who stepped down to join asset manager Apollo; Peter Burrill has been appointed as his interim successor.
Meanwhile, the luxury sector remains under pressure as Kering revealed a continued slump in sales for its flagship brand, Gucci, highlighting ongoing struggles in the high-end retail market. Reflecting this collective uncertainty, futures for both the Euro Stoxx 50 and the Stoxx 600 showed virtually no movement in premarket trading.
On the FX front, the US dollar retreated on Tuesday as traders braced for a wave of new economic data, including retail sales and labor figures.
The Japanese yen spearheaded the move, strengthening to 155.24 per dollar following an 0.8% jump on Monday. This recovery was bolstered by verbal warnings from Japanese officials and a renewed focus on fiscal sustainability under Prime Minister Sanae Takaichi, helping the currency distance itself from recent record lows against the euro and the Swiss franc.
Sentiment toward the dollar was further dampened by reports that Chinese regulators have encouraged domestic banks to reduce their holdings of US Treasuries, contributing to the “sell America” theme currently circulating in global markets.
Meanwhile, the euro maintained its strength at $1.19125 after its own significant rally on Monday, leaving the US Dollar Index (DXY) languishing near a one-week low of 96.79.
In China, the yuan surged past the 6.91 per dollar mark for the first time since mid-2023, bringing its year-to-date gains above 1% amid expectations of continued appreciation.
Other commodity-linked currencies saw more modest movement; the Australian dollar dipped 0.2% to $0.7079, pulling back slightly from a three-year peak, while the New Zealand dollar eased 0.3% to settle at $0.60395.
Currency Power Balance
