European markets wrap: FTSE 100 index poised to open lower on Friday

We examine how key European markets performed on Thursday and how the FTSE 100 is likely to open a touch lower on Friday as UK stocks post-Covid-19 recovery continues to flag.

European markets wrap:

  • European stocks lose ground to rising US-China tensions
  • FTSE 100 poised to end week in the red
  • European Central Bank opts to leave interest rates unchanged

European markets lost ground on Thursday and are likely to open lower on Friday amid rising US-China tensions, with Washington considering a travel ban on Chinese Communist Party (CCP) officials, according to a report by the New York Times.

The Euro Stoxx 600 closed marginally lower (-0.47%) on Thursday, with the UK FTSE 100 (-0.67%), German DAX (-0.43%) and the French CAC 40 (-0.46%) all seeing their post-Covid-19 recoveries show signs of stalling as investors fears of a second wave of cases grow as lockdown measures ease.

ECB opts to wait and see, leaving interest rates unchanged

Investors eagerly awaited to see what action the European Central Bank (ECB) would take to support the eurozone amid the economic fallout of the Covid-19 pandemic on Thursday, with it opting to leave interest rates and its emergency coronavirus stimulus program unchanged.

The ECB said that it wishes to adopt a wait and see approach to economic stimulus and interest rates changes while it assesses the economic health of the eurozone. However, it reiterated that there remains ample stimulus to support the European economy and help it navigate the challenges ahead.

‘Unless — and we don’t see it for the moment frankly — but unless there were significant upside surprises, our baseline remains that we will use the entire envelope of PEPP,’ ECB President Christine Lagarde said during a press conference on Thursday.

‘Clearly the second function of PEPP that I have mentioned, which is the monetary stance in order to respond to the shock of coronavirus, is still around and we still need to address that, so we will continue to use the envelope of PEPP and make sure that it helps us get back to the trajectory of inflation pace pre-Covid-19,’ she added.

FTSE 100 still climbing but poised to open lower on Friday

The blue-chip index continues to see its recovery labour amid a myriad of macroeconomic headwinds and is likely to open lower on Friday with FTSE 100 futures down 42 points at the time of publication, suggesting losses will continue in the final trading session of the week.

The FTSE 100 returned to the 6300 level yesterday, as it continues its rebound from last Friday’s low. The price is now firmly inside the zone of resistance that has been a barrier to any further upside since the middle of June, according to Chris Beauchamp, chief market analyst at IG.

‘While the price has pulled back from Wednesday’s high, it looks like it will create a higher low and push through 6300, targeting 6500 in the first instance,’ he added. ‘The bullish view remains in place unless we see a drop back below 6170.’

IG offers extended hours trading options for the FTSE 100 index and other major indices. Buy long or sell short on the FTSE 100 via CFDs and other instruments provided by IG's market-leading trading solution. Start today by opening a live or demo account with IG.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.