European stock futures are trading in the red after generating small gains in Wednesday trade. The latest selloff is supported by Federal Reserve’s minutes. Fed has indicated that the US economy is in trouble and the world’s largest economy needs a massive amount of public spending for recovery.

“Uncertainty surrounding the economic outlook remained very elevated, with the path of the economy highly dependent on the course of the virus and the public sector’s response to it,” minutes from the central bank’s July 28-29 meeting showed.

The members also hinted that virus spread will significantly impact employment, inflation, and economic activities.

European stocks are broadly in negative territory on Thursday amid concerns over economic recovery. The pan-European Stoxx 600 jumped 0.6% on Wednesday. Analysts say European stock markets are following Wall Street trends. Wall Street has hit record levels on Wednesday before the release of Fed minutes. The US stock futures are in red on Thursday.

Trade war concerns are also looming on stock market sentiments. President Donald Trump announced to suspend trade talks with China. He said the US don’t want to talk with China right now.

On the other hand, U.K. inflation numbers unexpectedly increased to the highest level in the past four-month at 1.0%, topping analysts’ expectations for 0.6% growth.

Travel and leisure stocks were among the biggest gainers on Wednesday. The shares of British Airways-owner IAG grew 7.6% while the stock price of EasyJet gained 3.3%. The share price growth of travel companies is driven by the news that Britain’s government plan to use COVID-19 testing to help shorten quarantine times.

“A full-blown lockdown looks unlikely,” Andrew Kenningham, chief European economist at Capital Economics wrote in a note. “The second wave will hold back the recovery, but it will probably not cause another deep recession.”

What Does it Mean for Traders?

  • Wall Street and European stock futures under pressure.
  • Gold price dropped to $1950
  • The dollar regained some momentum
  • Euro steady against other major currencies.