European Stocks Seen Lower; Chaotic Presidential Debate Weighs

This post was originally published on this site – European stock markets are seen opening lower Wednesday, with investors acting cautiously following a heated first U.S. presidential debate and despite data suggesting China’s recovery remains on track.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 1% lower, CAC 40 futures in France dropped 0.9% and the FTSE 100 futures contract in the U.K. fell 0.7%. 

Chinese data released earlier Wednesday showed that the world’s second-largest economy’s recovery continues to progress. The September manufacturing PMI came in at 51.5, beating August’s 51 reading, and the non-manufacturing PMI was 55.9 against August’s 55.2 – both remaining above the 50-mark separating growth from contraction.

“China has been in the lead in terms of the Asia recovery story, but there is little doubt that its recovery also helps pull the rest of Asia along in its wake,” wrote ING’s Robert Carnell, in a research note.

However, this positive economic news has been unable to persuade investors to put their money to work, judging by the weak tone in the futures markets, with Covid-19 infections on the rise again globally and after a contentious presidential debate in which President Donald Trump again cast doubt on whether he would accept the election’s outcome.

“What people are most concerned about is the fairness of the election and how it will be carried out…under normal circumstances, the positive economic data from China we’ve seen would support risk-on trades, but this time is different,” said Ayako Sera, market strategist at Sumitomo Mitsui (NYSE:SMFG) Trust Bank in Tokyo, in a Reuters report.

Turning back to Europe, the U.K. GDP was revised to show a drop of 19.8% in the second quarter compared with the first, after the initial estimate showed a drop of 20.4%, while German retail sales rose a better than expected 3.% in August.

Later in the session sees the release of German unemployment data for September, which will be studied carefully as an indicator of the strength of the economic recovery in Europe’s largest economy.

Oil prices fell Wednesday, continuing the sharp losses of the previous session, on the back of worries about future consumption amid the Covid-19 pandemic and continued oversupply issues. Oil major Royal Dutch Shell (LON:RDSa) said it would cut up to 9,000 more jobs as it wrestles with a new environment of low prices and potentially lower long-term demand.

Data from the American Petroleum Institute on Tuesday showed a draw of 831,000 barrels for last week, as against an expected build of 1.4 million barrels, but this was insufficient to push the market higher. 

Investors now await crude inventory data from the U.S. Energy Information Administration later in the session. 

U.S. crude futures traded 0.9% lower at $38.94 a barrel, while the international benchmark Brent contract fell 1.1% to $41.11. Both contracts closed more than 3% lower on Tuesday.

Elsewhere, gold futures fell 0.6% to $1,891.45/oz, while EUR/USD traded 0.1% lower at 1.1727.