European Stocks Seen Higher; US Stimulus Talk Helps

By Peter Nurse 

Investing.com - European stock markets are seen opening higher Friday, helped by a late recovery on Wall Street, but concerns remain about the regional economic recovery as the number of coronavirus cases continue to rise.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.4%. 

On Wall Street overnight, the Dow Jones Industrial Average closed 0.2% higher, the S&P 500 gained 0.3% and the Nasdaq Composite added 0.4%. 

Small gains, but these represented a recovery after weekly unemployment data had disappointed. The strongest sales of single-family homes in nearly 14 years in August helped to revive some faith in the recovery.

Adding to the renewed confidence was talk that Democrats in the U.S. House of Representatives were working on a $2.2 trillion coronavirus stimulus package that could be voted on next week, and that House Speaker Nancy Pelosi reiterated she is ready to negotiate on it with the White House.

More stimulus is also likely to be needed in Europe, after this week’s activity data showed the recovery stalled in September as the resurgence of Covid-19 hit the services sector particularly badly.

On Thursday, French Prime Minister Jean Castex warned that the government could be forced to re-confine areas if the number of cases did not improve in the coming weeks. His government had already announced extra restrictive measures on Wednesday, mainly in big cities, to contain the disease.

"Evidence is mounting that the rebound is not just fading, but also potentially reversing," said Pantheon Economics' Claus Vistesen in a note to clients, although he acknowledged that national surveys of business confidence from Germany and France were stronger than IHS Markit's PMIs had suggested earlier this week.

In corporate news,BMW (DE:BMWG) may be in the spotlight after the German luxury car maker agreed to pay $18 million to the Securities and Exchange Commission to settle claims that it had disclosed misleading sales figures. In the U.K.. fast fashion group Boohoo published the conclusions of its review into supply chain issues that had knocked its share price badly earlier in the summer.

Oil prices traded largely flat as renewed hopes for more stimulus measures to boost the U.S. economy were balanced by persistent concerns over demand.

U.S. crude futures traded 0.1% lower at $40.29 a barrel, while the international benchmark Brent contract was flat at $41.94. Brent is heading for a drop of over 2% this week, while U.S. crude is on track for a decline of around 1.5%.

Elsewhere, gold futures fell 0.3% to $1,872.20/oz, while EUR/USD traded 0.1% lower at 1.1667.

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