European shares look set to open higher on Friday bolstered by stats showing stable economic growth in China and another record-breaking session on Wall Street that saw the S&P500 top 3,300 for the first time.

Mining companies are likely to feature among the top risers on the FTSE 100 after China said its economy grew by 6.1% in 2019. It marks a slowdown from the 6.6% in 2018 but was within the target range set out by the government. So far it looks like Beijing is perfect engineering a soft landing to its economy with just the right levels of debt and stimulus even amidst a trade war with the US. Either that or the figures are fictitious.

UK banks, which report earning in a couple of weeks could benefit from some positive pass-through of Morgan Stanley reporting its highest profits on record paired with a plan to boost to shareholder returns. Barclays shares are -2% so far this week with investors seemingly reluctant to predict a jump in FICC trading as seen at JP Morgan and Morgan Stanley will aid earrings. If investors want more exposure to Europe coupled with some of the lowest valuations out there and US bank returns are anything to go by, it might be time to dip a toe in European banks.

On the other hand, European technology shares are being valued at the highest level since dot-com times. Valuations in tech reached another level of fever pitch on Wall Street when Google-parent Alphabet reached the $1 trillion-dollar valuation milestone for the first time. By this ludicrous measure, the value is to be found in the two remaining FAANG stocks not to reach $1 trillion – Facebook and Netflix.

Just quickly on US politics. We've been wanting to pose the question, does impeachment matter for markets? But the answer is so stark staring obvious that we've held back. Maybe something in the Senate trial will change this so let's see.

More evidence that the US economy is still on solid ground helped lift the US dollar. Retail sales came in ahead of expectations for the important holiday shopping month of December and the Philly Fed surveys appeared to show manufacturing is carving out a base following a period of contraction. We still view USDJPY, while above 110 as the best place to position for more dollar strength. Later today sees the release of US housing data and industrial production for November.

The British pound is steady in early trading on Friday before the release of UK retail sales data. Expectations are for a 0.7% m/m rise in December after a shock -0.6% drop last month, giving an annual rise of 2.6% in 2019. Sterling has been making up some lost ground over the past two days. We think traders saw the pound at 1.30 to the dollar and figured 65% odds that the Bank of England lowers rates this month is over-egging the pudding. Indeed, we said this time last week after Carney's speech that "we're looking at this as possible a buying opportunity in Sterling." Extra import can be attached to day's data since there are only a handful of big releases until the BOE make their decision on January 30 and Britain leaves the EU on January 31.

Crude oil prices have staged a small recovery after being battered in the last week since tensions between the US and Iran cooled off. The IEA forecasting that global oil demand will pickup next year by 1.2m barrels per day thanks to subdued prices and better economic growth is a positive for crude prices. Less positive is that the agency has predicted supply will outstrip demand thanks to production in non-OPEC nations. After having agreed to cut output in December, another six months of ceding market share to the US might mean OPEC+ nations might find it a lot harder to do so at their next meeting in the Summer.

Gold looks resilient at $1550 per oz despite better economic data in the US. A sense that the US China trade deal doesn't quite offer the reduced tensions and better growth prospects that it had purported to do explains the lack of follow-through selling in gold.


Opening Calls

FTSE 100 to open 11 points higher at 7620

DAX to open 71 points higher at 13,500

S&P 500 to open 2 points higher at 3,318

Dow Jones to open 23 points higher at 29,320

This information has been prepared by London Capital Group Ltd (LCG). The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. LCG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.

Analysis feed

Latest Forex Analysis

Editors’ Picks

AUD/USD: 0.6625 remains a tough nut to crack on road to recovery

AUD/USD reached the lowest low in a decade and following an 8-year run to the downside, it could be time for a healthy correction. The spot's momentum divergence with the price is compelling. The Aussie's upside attempts continue to remain capped by 0.6625. 


USD/JPY fades the recovery above 111.00 amid negative Asian equities

USD/JPY pares gains and falls back below 111.00, as the risk-off action in the Asian equities amid looming coronavirus risks globally offers some support to the JPY bulls. The spot bounced-off a four-day low earlier today in tandem with the S&P 500 futures and Treasury yields. 


US Consumer Confidence February Preview: Steady as the labor market goes

The labor market is expected to continue its winning ways after adding 225,000 new jobs in January and averaging 175,000 per month last year.  New positions remain far ahead of underlying growth in the labor force.

Read more

Gold: Resistance-turned-support trendline keeps $1,700 on the cards

Gold recovers most of the early-day losses while trading around $1,658, -0.10%, while heading into the European session on Tuesday. Even so, it needs to cross Monday’s high for the fresh rise. Bulls will target the year 2013 top, $1700 during the fresh run-up.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors