European Markets Open With Mixed Signals Today

On Monday the European markets opened very diversified, as investors absorb more coronavirus-inspired lockdowns, extended Brexit negotiations as well as strong Chinese growth ahead of key central bank meetings.

DAX traded 0.3% lower, CAC40 dropped 0.5%, while the FTSE 100 rose 0.2%.

Global stock markets have seen strong gains over the last few weeks, assisted by investor optimism that positive vaccine developments could prompt a global recovery in 2021. However, the roll out of these shots will take time and the Covid-19 virus is still strongly affecting economies across the continent. The southern German region of Bavaria notified that it will foist a tougher lockdown from Wednesday until early January, signifying that people will only be able to leave their homes if they have a good reason.

Germany’s problems with the second wave of Covid-19 has without a doubt contributed towards production expectations deteriorating for the coming months. Germany’s Ifo institute said its index for production prospects dropped to 5.5 points in November from 16.3 points in October.

An additional factor possibly weighing is the uncertainty surrounding Britain’s trading relationship with the EU in the new year. British Prime Minister Boris Johnson and European Commission President Ursula von der Leyden are due to hold a call on Monday evening with differences over fishing rights, fair competition and ways to solve future debates still remaining.

But there is some good news. Earlier today, China experienced the biggest surge in November exports since February 2018, indicating not just economic recovery by the second largest economy in the world, but also a recovery in global demand.

In addition, European Central Bank and the U.S. Federal Reserve are both due to release policy decisions later in the week. The ECB is widely expected to increase its bond-buying program to aid the region’s economic recovery.