European Stocks Slip as Virus Weighs; HSBC Shines

By Peter Nurse 

Investing.com - European stock markets weakened Tuesday, with the growing incidence of coronavirus cases in the region weighing despite some strong earnings from the banking sector.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.3% lower, the CAC 40 in France fell 0.8%, while the U.K.'s FTSE index dropped 0.1%.

The number of Covid-19 cases continued its incessant rise, with over 43.4 million cases globally as of Oct. 27, according to Johns Hopkins University data.

Europe has been hard hit by this second wave of the virus, with France, for example, on Monday seeing the highest number of coronavirus patients going into hospital since April. Several countries have now imposed new restrictions--Spain declaring a state of emergency for six months--curtailing economic activity.

This increases expectations of action by the European Central Bank when its governing council meets on Thursday, although the consensus view is that the bank will only announce fresh stimulus at its December meeting.

There was some positive corporate news Tuesday, with HSBC (LON:HSBA) stock soaring 5.6% after the banking giant reported third-quarter pretax profit of $3.1 billion, a smaller-than-expected 35% drop from a year earlier.

Banco Santander (MC:SAN) also impressed, with its stock rising 4.2% after recording third-quarter net profit of 1.75 billion euros ($2.1 billion), a strong bounce after posting the first loss in its 163-year history in the second quarter.

BP  (LON:BP) (NYSE:BP) stock rose 2.4% after the oil major returned to profit in the third quarter, reporting underlying replacement cost profit of $86 million, a big improvement on its massive second-quarter loss of $6.7 billion.

Rolls-Royce (LON:RR) (OTC:RYCEY) stock rose 3.7% after the Financial Times reported that the engine manufacturer is preparing temporary closures to factories while reducing working hours in order to cut costs. 

Over in the U.S., House Speaker Nancy Pelosi said Monday that she remained hopeful an agreement over a new coronavirus relief package can be reached before the Nov. 3 elections, but this looks increasingly unlikely.

Oil prices edged higher Tuesday, rebounding to a degree after Monday’s hefty losses, but the surge in coronavirus cases in the U.S. and Europe means sentiment remains gloomy.

Hurricane Zeta is due to make U.S. landfall on Wednesday, with rigs and refineries shutting down in preparation for its arrival, while traders also await crude oil supply data from the American Petroleum Institute, due later in the session.

U.S. crude futures traded 0.9% higher at $38.91 a barrel, while the international benchmark Brent contract rose 1% to $41.20. Both contracts fell more than 3% on Monday.

Elsewhere, gold futures fell 0.1% to $1,903.50/oz, while EUR/USD traded 0.1% higher at 1.1812.

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