European Stock Markets Reverses Tuesday Gains, Here's Why

European stock market futures are pointing losses in the Wednesday trading following a brief rally on Tuesday. All the key European stock market futures are in the red on Wednesday despite stronger than expected quarterly earnings.

Investor’s optimism over $1 trillion dollar stimulus package from the US government added to investors sentiments on Tuesday. The slowing coronavirus cases in the United States are among the factors behind the Tuesday gains.

“Stocks are largely showing modest gains as the optimism surrounding the U.S. $1 trillion stimulus package story is outweighing the health crisis,” said David Madden, market analyst at CMC Markets U.K.

The Stoxx Europe 600 rose 0.5% on Tuesday while FTSE 100 gained 0.39%. However, The German DAX and French CAC extended Monday losses.

Positive earnings reports are supporting the market sentiments. The French automobile maker Peugeot shares jumped sharply after reporting a surprise profit for the first half. Peugeot and Fiat Chrysler Automobiles are working on a merger before the end of the first quarter of 2021.

LVMH Moet Hennessy shares fell almost 4.5% as the luxury-goods giant generated massive profit drop when compared to the previous periods.

Following a 750 billion euros stimulus deal between the EU nations, U.S. Senate Majority Leader Mitch McConnell unveiled a $1 trillion stimulus plan.

However, new travel restrictions in European and Asian countries could hinder the economic growth prospects. Companies related to travel, leisure, and entertainment are facing big losses over the past couple of months. Asian stocks are moving between gains and losses as investors are waiting for the outcome of the Federal Reserve’s meeting.

What Does It Mean?

  • European stock futures are in red.
  • Wall Street reported big losses on Tuesday and futures are mixed on Wednesday.
  • Gold continues trading above $1900, with a $2000 mark in sight.
  • EURUSD pair surged on Wednesday.
  • Crude oil prices also jumped on Wednesday.       


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