European Market Open Indices mixed as COVID restrictions tighten

• European indices are set to trade slightly lower this morning, while the FTSE 100 is called to open a touch higher than the close yesterday.
• European countries are introducing new rules to try and stem a rise in coronavirus cases, with Germany, France and the Netherlands all changing their approach ahead of the busy holiday season.
• The economic calendar is busy today, with PMI data due from Europe this morning and the US this afternoon, ahead of the Federal Reserve meeting this evening.
• In commodities, oil is holding steady above the $50 mark while gold has edged slightly higher.

FTSE 100 holds steady

The FTSE 100 is set to open a smidgen higher this morning at 6546.3 compared to 6543.0 at the close on Tuesday.

European indices edge lower

The Euro STOXX Index is called to open down 0.07% at 3534.5 this morning from 3537.3 at the end of play yesterday.

Germany’s DAX is set to open 0.1% lower at 13406.8 from 13424.5 while France’s CAC 40 is to open down 0.1% at 5556.0 from 5563.8.

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European countries tighten lockdown rules

Germany will reintroduce stricter lockdown rules from Wednesday as the country tries to stem a rise in cases over the holiday season. Schools and non-essential shops will close, with the hospitality industry already shut, while new rules coming into play that dictate how and where people can meet. The UK’s capital entered tougher restrictions today. The Netherlands has also recently introduced a new tougher lockdown period that will last five weeks, while France is replacing its lockdown with a new curfew.

Germany has also led a push for the European Medicines Agency to review the Pfizer-BioNTech vaccine that has already been approved in the UK, US, Canada and other countries. The EU is yet to approve a vaccine for emergency use but is expected to make a decision on December 21 rather than the original date of December 29 after Germany’s health minister warned the body had to move quicker to maintain the trust of the bloc’s citizens.

Is a Brexit deal on the cards?

Hopes that the UK and the EU could be close to a Brexit deal increased. UK MPs are expected to be put on standby for an extended sitting next week so any possible deal can be scrutinised, although some Eurosceptic MPs are keen to discuss a no-deal outcome too.

The EU’s chief negotiator Michel Barnier has suggested a deal would need to be struck sooner rather than later to get it approved before the end of the year, while also warning that trade between the two sides could fall back on WTO terms for a short period if there isn’t enough time to get the deal over the line.

BBC Newsnight’s political editor Nicholas Watt tweeted last night that there was a ‘big buzz’ among Conservative MPs that the UK is ‘heading towards a Brexit deal with the EU’. He added that MPs are keen to have any deal done by the end of play Friday if MPs are expected to scrutinise it next week.

US Federal Reserve to provide outlook for 2021

The Fed is scheduled to meet later today to release its outlook for the US economy ahead of 2021, with markets hoping the introduction of vaccines will bolster the central bank’s view. The start of a vaccine rollout since it last met in November has changed the playing field this time around and markets are keen to see how it has impacted its view on the US economy.

The bank’s bond-buying programme will be closely-watched, with some expecting it to change the duration of its bond purchases while others expect the bank to simply outline what would need to happen for it to change its plan.

The fact politicians are still wrangling over a new fiscal stimulus bill puts further pressure on the Fed later today as it gives the bank less clarity to work with. A dovish tone is expected overall, but the question is how dovish it will ultimately be on Wednesday.

Novartis gets a boost from Entresto recommendation

The US Food & Drug Administration (FDA) is expected to approve a heart failure medicine named Entresto to treat another form of the disease after an advisory panel recommended the drug. Novartis is aiming to boost annual sales of the drug to $5 billion and approval would help it achieve its goal considering sales amounted to just $1.7 billion last year.

Banco BPM to take full control over insurance partnership

Banco BPM said it is taking full control of an insurance partnership with Cattolica by buying the 65% stake it doesn’t already own for EUR335.7 million. This is expected to lower the bank’s core capital of between 5 and 60 basis points. It was reported earlier this week that Banco BPM was considering merging with BPER, and this deal is thought to position it better to pursue that.

Bunzl announces sales growth and acquisition

Bunzl said revenue for its financial year will be up 8% at actual exchange rates and 9% at constant rates thanks to continued organic growth and the boost received from acquisitions. However, it warned revenue is expected to fall in 2021. It also announced it has bought Canadian outfit Snelling.

AVEVA-OSIsoft deal gets approval

AVEVA said it has secured most of the necessary antitrust approvals to complete its deal to buy OSIsoft. It is expecting to secure the last of the approvals early next year and complete the deal in February.

Dixons Carphone swings to profit

Electrical retailer Dixons Carphone said revenue rose 3% in the first-half of its financial year, pushing it to a £45 million pretax profit compared to an £86 million loss the year before. Online sales were up 57% and sales grew in all regions.

Forex: Yen strengthens

City Index analyst Christophe Chevalier looks at USD/JPY this morning and has a look at the chart from a technical point of view.

Start trading the opportunities in the forex market today.

The most drastic movements in the currency markets this morning, according to data from Reuters, are as follows:

Commodities: Oil holds steady as gold edges higher

Brent trades at $50.58 per barrel this morning compared to $50.70 at the close of trade yesterday, while WTI has edged down to $47.63 from $47.70.

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Gold traded at $1857.9 in morning trade, slightly higher than $1853.5 at Tuesday’s close.

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Market-moving events in the economic calendar

Activity in the economic calendar picks up today. There is French manufacturing and services PMIs at 0815 GMT, with Germany’s PMIs following at 0830 GMT, the eurozone at 0900 GMT and the UK at 0930 GMT.

Later, attention turns to North America with US with retail sales and CPI data out from Canada due at 1330 GMT. US PMI data comes out at 1445 GMT, ahead of the main event of the day that sees the US Federal Reserve release its monetary policy statement at 1930 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.