European stocks recover after shaky start; caution reigns before U.S. elections

In this news, we discuss the European stocks recover after shaky start; caution reigns before U.S. elections.

LONDON (Reuters) – European stocks recovered from their early losses on Friday, after a bearish Asian session in which investors adjusted their risk exposure ahead of the US election in two weeks. Record cases of COVID-19 in Europe also weighed on sentiment.

The MSCI Global Stock Index, which tracks stocks from 49 countries, slipped as much as 0.2% .MIWD00000PUS.

As of 8:25 a.m. GMT, MSCI’s main European index was up 0.4% .MSER and the STOXX 600 .STOXX in Europe was up 0.2, after initially falling, fears about the economic impact foreclosure restrictions having exceeded some solid earnings.

With just two weeks of the US presidential election on November 3, analysts said investors were cutting their riskier bets.

President Donald Trump and his Democratic rival Joe Biden will debate each other in an event Thursday that will feature a mute button to allow each candidate to speak without interruption.

U.S. fiscal stimulus talks are at the center of concerns, as House Speaker Nancy Pelosi today set a self-imposed deadline to reach agreement on a coronavirus aid package.

Pelosi said over the weekend that differences remained but that she was optimistic that legislation could be passed before the election. But markets doubted fiscal stimulus measures would be adopted in the short term.

“The likelihood of a deal going through doesn’t seem more likely today than it was a week ago,” said Michael Hewson, chief market analyst at CMC Markets. The lack of action is of particular concern in light of the increase in COVID-19 cases in the United States, he said.

“While the stock markets appear to be struggling in the short term, the lack of a fiscal stimulus deal in the next two weeks is probably neither here nor there,” he added.

“Most investors expect to see some sort of fiscal stimulus in the next six months regardless of who participates, the only unknown being size and scale, and when. The problem for the stock markets is that they want to see it now.

New, stricter restrictions to limit the spread of the coronavirus in Europe also weighed on sentiment. Ireland announced some of Europe’s toughest restrictions on Monday, telling people not to travel more than three miles from their homes. New restrictions have also been approved in the Lombardy region of Italy.

France has reported a massive increase in the number of people hospitalized.

The US dollar was stable against a basket of currencies, flat for the day at 93.435 at 0742 GMT = USD. Riskier currencies such as the Australian dollar and the Kiwi dollar fell.

The minutes of the Reserve Bank of Australia’s last policy meeting confirmed that it had discussed cutting rates and buying longer-term debt to support the economy and restrict the currency.

The pound fell slightly against the dollar and the euro as Brexit negotiations stuck in limbo. The UK government has said it sees no basis for relaunching trade talks with the European Union unless there is a fundamental change in approach.

Eurozone government bond yields have risen, with the German benchmark 10-year rate hovering near recent seven-month lows at -0.623% DE10YT = RR.

Gold edged down as oil prices changed little after three days of decline over fears that a resurgence in COVID-19 infections could dampen the recovery in fuel demand.

Brent LCOc1 futures were trading down 2 cents, or 0.4%, at $ 42.44 a barrel at 0748 GMT, rebounding after falling to $ 42.19 earlier in the session.

Reporting by Elizabeth Howcroft, editing by Larry King

Original © Thomson Reuters

Originally posted 2020-10-20 12:16:11.

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