European Market Open: Lower start as coronavirus fears return

• Northern Ireland extends its lockdown while the UK prime minister warns it is ‘too early’ to decide when England can ease restrictions, with one scientific advisor warning pubs and restaurants should stay closed until March.
• In the US, president Joe Biden has outlined how the country is stepping-up the fight against the pandemic by signing a string of executive orders.
• In forex, the pound has fallen from the highs its hit against the euro and dollar yesterday.
• WTI is in focus today ahead of US data being released this afternoon.

FTSE 100 to open lower

The FTSE 100 is set to open 0.3% lower this morning at 6714.0 after closing at 6733.1 yesterday.

European markets to follow

The Euro STOXX Index is called to open 0.4% lower today at 3612.5 from 3626.2 at the close of trade on Thursday.

France’s CAC 40 is set to open 0.3% lower at 5576.7 from 5596.0 at the end of play yesterday.

Germany’s DAX is set to open down 0.4% at 13891.0 after closing at 13940.7 yesterday.

Start trading the opportunities with indices today.

‘Too early’ to decide when England should come out of lockdown

UK prime minister Boris Johnson warned yesterday that it was ‘too early’ to decide if lockdown in England will end in the spring as planned. The government only looks interested in reviewing the restrictions once all 15 million people in the top four most vulnerable groups of people are vaccinated – which it hopes to complete by February 15. Nearly 5 million people have been given a jab so far.

The prime minister has said he wants this to be the country’s last lockdown but is facing pressure to make it last longer. One leading scientific advisor warned that pubs and restaurants should remain closed until May.

In other news, the lockdown in Northern Ireland will be extended until March 5, ministers said yesterday, but warned they could last until after the Easter holidays. Deputy first minister Michelle O’Neill said ‘we don’t know what will come after’ March 5 but said nobody wants to keep strict measures in place longer than necessary.

The decision comes as cases in Northern Ireland surge after rules were relaxed over the Christmas period.

UK considers paying people to self-isolate

Meanwhile, UK ministers are expected to discuss the possibility of paying £500 to people that must self-isolate, according to leaked documents seen by the BBC.

There are fears that not everyone is self-isolating when they need to, mainly because they do not have the financial support needed to stop going to work and stay at home. The BBC claims the payments could end up costing up to £453 million each week.

Nissan commits to UK after ‘positive’ Brexit deal

Japanese carmaker Nissan – the largest individual carmaker in the UK – has said its Sunderland plant is secure for the long-term thanks to the Brexit trade deal struck between the UK and the EU late last year.

Chief operating officer Ashwani Gupta said the ‘Brexit deal is positive for Nissan’ and that it has ‘created a competitive environment for Sunderland, not just inside the UK but outside as well’.

The company said it intends to move additional battery production operations to the UK plant from Japan so it can source them tariff free.

‘We've decided to localise the manufacture of the 62KW battery in Sunderland so that all our products qualify. We are committed to Sunderland for the long term under the business conditions that have been agreed,’ Gupta said.

Previously, Nissan was among many that warned Brexit threatened making the auto industry unviable in the UK considering 8 out of 10 cars produced in the country are exported to the EU.

ECB holds the door open to more stimulus

The European Central Bank left its monetary policy unchanged yesterday after extending its stimulus during its last meeting in December, leaving it to governments to combat the pandemic.

President Christine Lagarde said the immediate outlook was hampered by a resurgence in cases and fresh lockdown restrictions and that this was likely to weigh on the economy in both the fourth quarter of 2020 and the first quarter of this year. However, the rollout of vaccines left the bank hoping for a recovery to start in the second quarter.  

Lagarde said the ECB will continue to buy bonds for as long as it needs to, with around EUR1 trillion still available under its Pandemic Emergency Purchase Programme.

‘Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term,’ Lagarde said.

US president Biden steps up fight against coronavirus

US president Joe Biden signed 10 executive orders yesterday to ramp-up the country’s battle against the coronavirus pandemic.

One order has enacted the Defense Production Act – usually reserved for times of war - to speed up the production and delivery of everything from vaccines to masks, gloves, gowns and other protective equipment. The orders have also made masks mandatory on public transport, ramped-up testing, provided extra funding to schools, provided additional medical care and pushed for better data to be collected on the pandemic.

The president described the fight against the pandemic as a ‘wartime undertaking’. Chief medical officer Anthony Fauci backed Biden’s efforts and said the country could return to ‘a degree of normality’ this autumn if it can get 70% to 80% of adults vaccinated by the end of summer.

The US has been among the worst-hit by the virus, which has now infected over 24 million Americans and killed over 400,000. Biden has a plan to vaccinate 100 million people during his first 100 days in office – a herculean task considering the country has administered 17.5 million doses so far – less than half the number of doses currently available.

The additional measures will help install confidence that the US can clamp down and take the necessary action to make a quicker recovery this year, backed by the president’s new $1.9 trillion stimulus to get the economy going again. However, Biden warned the worst of the pandemic was still to come.

Google threatens to pull search engine in Australia

Alphabet’s Google said it will pull its search engine in Australia if the country implements new rules that it would force it to pay media companies for their content.

Australia is keen to push ahead with new laws that would force tech companies to negotiate payments to publishers and broadcasters for content that is included in search results or on social media feeds like that of Facebook. The government wants to force them to have mediated negotiations if they cannot agree terms on their own.

‘Coupled with the unmanageable financial and operational risk if this version of the Code were to become law, it would give us no real choice but to stop making Google Search available in Australia,’ said Mel Silva, Google’s managing director for Australia and New Zealand.

That has been taken as a threat by some, with prime minister Scott Morrison stating ‘we don’t respond to threats’.

Forex: Pound falls from recent highs

GBP/USD traded at 1.36974 in early trade, down 0.3% from 1.37326 at the close yesterday, when it hit its highest level since April 2018.

EUR/GBP was trading at 0.88826 this morning, up 0.3% from 0.88595 yesterday, when it hit its lowest level since May.

Meanwhile, EUR/USD was broadly flat this morning at 1.21661 from 1.21636 at the end of play on Thursday.

City Index analyst Matt Weller has a technical look at EUR/USD following the ECB meeting yesterday.

Start trading the opportunities in the forex market today.

Commodities: Oil prices down ahead of US data

Brent was trading at $55.38 a barrel this morning, down from $55.96 at the end of play yesterday, while WTI edged down to $52.42 from $53.01.

The American Petroleum Institute revealed earlier this week that US crude oil inventories increased by 2.6 million barrels in the week to January 15 – a starkly different result from the 1.2 million barrel decline expected by markets.

WTI will remain in focus today with the EIA gas storage change at 1500GMT and the crude oil stocks change to be released at 1600 GMT. The Baker Hughes US oil rig count, which provides an insight into drilling activity, follows at 1800 GMT.

Start trading the volatility in oil prices today.

Gold traded at $1861 per ounce this morning, down from $1870 at the close on Thursday.

Start trading gold and other precious metals today.

Market-moving events in the economic calendar

The economic calendar is busy today, with a slew of PMIs to be released. This morning sees France’s PMI released at 0815 GMT, followed by Germany at 0830 GMT. PMI numbers for the eurozone as a whole will be released at 0900 GMT.

The UK’s figures will be published at 0930 GMT and US PMIs will be released at 1445 GMT. In Canada, there is also retail sales due at 1330 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.