European Stock Futures Lower; Pausing for Breath

By Peter Nurse 

Investing.com - European stock markets are seen opening lower Monday, with investors pausing for breath at the end of a strong month. Virus concerns, ongoing Brexit trade negotiations and potentially deteriorating U.S.-China relations contribute to this selloff.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.8% lower, CAC 40 futures in France dropped 0.9% and the FTSE 100 futures contract in the U.K. fell 1.3%. 

Largely positive news surrounding potential vaccines to treat Covid-19 has resulted in strong recent gains in global stock markets. In Europe, the DAX has gained 15% this month, the FTSE 100 is up 14% and the CAC 40 over 20%.

However, a number of European countries are now facing public disquiet over the restrictions their governments have put in place to try and curb the spread of the Covid-19 virus ahead of the important Christmas period. Without the buy-in of the public, containing the spread will be very difficult.

Britain and the European Union are heading into a "very significant" week, British foreign minister Dominic Raab said on Sunday, with serious differences over a trade deal yet to be resolved.

Additionally, Reuters reported that the outgoing Trump administration is set to add China's top chipmaker, SMIC, and its largest offshore oil and gas producer, CNOOC (NYSE:CEO), to a U.S. blacklist, risking a further deterioration in relations between the globe’s two largest economies.

In corporate news, HSBC (LON:HSBA) is considering a complete exit from retail banking in the United States, the Financial Times reported Sunday. HSBC's U.S. arm has struggled for some time.

European Central Bank President Christine Lagarde is due to speak later Monday, while preliminary inflation data, primarily from Germany, are also due.

Oil prices slipped lower Monday, with traders cautious ahead of a meeting of most of the top crude producers to decide output levels in order to balance the market.

OPEC and its allies, a group known as OPEC+, are expected to maintain the current cap on supply at the formal two-day meeting that starts later Monday, rather than raising it in January by 2 million barrels a day as previously agreed. However, a panel of OPEC+ ministers couldn’t reach agreement in an informal online discussion on Sunday.

U.S. crude futures traded 1.8% lower at $44.82 a barrel, while the international benchmark Brent contract fell 1.8% to $47.37. Both benchmarks are still set for a rise of more than 25% in November, boosted by hopes for three promising coronavirus vaccines.

Elsewhere, gold futures fell 0.5% to $1,778.45/oz, dropping over 5% this month, while EUR/USD traded 0.1% higher at 1.1965.

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