In this news, we discuss the Wall Street to follow COVID-mired Europe lower.
LONDON (Reuters) – Wall Street was expected to follow a decline in Europe on Thursday, as the reassuring profits of bank heavyweight Morgan Stanley were overshadowed by the inability of U.S. policymakers to agree on a budget boost for counter the fallout from COVID-19.
Major European markets were on track for their worst day in three weeks and US S&P 500 ESc1 futures were showing a 1% drop at the opening bell as investors also digested a further rise in weekly figures for unemployment claims.
The US Treasury Secretary said on Wednesday that a budget package ahead of next month’s presidential election would be difficult.
Morgan Stanley was on the bright side, beating expectations with a 26% jump in profits in the third quarter thanks to higher trading due to the pandemic making markets more volatile.
European stocks were still down more than 2% to their two-week low, however, hit by tougher brakes in London and Paris to tackle the coronavirus, and lingering difficulties in trade talks over the Brexit have also slowed down.
Analysts said the biggest pullback in markets in three weeks was more of a pause than a fundamental shift.
“We have to be careful not to read these metrics too much ahead of the US election,” said Ned Rumpeltin, European Head of Foreign Exchange Strategy at TD Securities
“There’s a kind of general feeling of no risk for the day. I don’t really see it today in terms of changes in general trends and direction. “
The pan-European STOXX 600 .STOXX index fell 2.3% to its lowest level in nearly two weeks, the London .FTSE and Paris .FCHI markets 2.1% -2.4% lower and Frankfurt. GDAXI and Milan .FTMIB both nearly 3% weaker, taking their queue from weaker Asian markets overnight.
Thursday’s weekly US jobless claims figures showed a larger than expected increase to 898,000 from 840,000 the week before.
“All of this indicates a greater impact on Q4 business and justifies some adjustment in market prices,” said Derek Halpenny, head of research at MUFG.
Graphic: Second waves of coronavirus hit Europe
BREXIT ON THE EU SUMMIT MENU
A two-day summit of European Union leaders will begin on Thursday as the EU and Britain continue efforts to overcome obstacles, such as fishing rights and competition guarantees, to agree a trade deal before the end of the UK’s Brexit Transition Agreements on Dec.31.
The pound slipped 0.4% to $ 1.2950 while the euro fell 0.25% against the dollar to $ 1.1716, its lowest in a week. GBP = D3
Investors will listen to European Central Bank President Christine Lagarde, who takes part in a debate on the global economy at 4:00 p.m. GMT as part of the annual meeting of the IMF and the World Bank being held. virtually.
In Asia, the largest MSCI Asia-Pacific stock index .MIAPJ0000PUS fell 1.3%, with Hong Kong .HIS and India .NSEI both losing more than 2% and Japan’s Nikkei .N225 closing lower by 0.5%.
As traders sought safety again, German government bonds rallied to leave yields at their lowest level since the spread of COVID-19 in March caused a global collapse in stock markets and others. riskier assets. DE10YT = RR. [GVD/EUR]
Oil prices have also fallen, as the resurgence of the virus in large parts of the world has fueled concerns about economic activity.
Brent LCOc1 crude futures fell 3.3% to $ 41.87 per barrel, US West Texas Intermediate (WTI) futures on CLc1 crude fell to $ 39.62 per barrel while XAU gold = and industrial metals like copper MCU3 = LX> have slipped slightly.
“If demand weakens significantly, OPEC + will have no choice but to cancel its production increase if it does not want to risk yet another oversupply and another drop in prices,” Commerzbank said. .
Additional reporting by Suzanne Barlyn in New York; Edited by Gareth Jones, Chizu Nomiyama, Kirsten Donovan
Original © Thomson Reuters