European Stocks Fumble on Economic Growth Concerns, Stimulus Hopes Fades
European stocks moved into the green on Wednesday after generating losses on Tuesday as analysts are positing slower economic recovery ahead due to rising coronavirus infections all over the region.
Moreover, hopes over the second US stimulus program faded after Donald Trump said to stop thinking about stimulus before the election.
US stock indices reported more than a 1.5% drop in Tuesday trading after Trump’s tweet. But stock futures turned green on Wednesday as some investors believe stimulus is likely right after the elections.
“We should have seen a much deeper selloff for the global markets, and the U.S. futures should have tanked,” said Naeem Aslam, chief market analyst at AvaTrade, in a note to clients.
“The reason for U.S. stock futures trading higher is because investors know that whoever will win the U.S. presidential election, another stimulus package is more likely to happen.”
Concerns are high over the rising coronavirus infections in the European region. Several countries have already imposed restrictions on travel and leisure businesses to avoid the virus spread.
“The region’s cyclical tilt will leave it vulnerable if economic recovery stalls. A strong euro will also weigh on corporate performance,” said the strategists on European stocks.
Oil prices are struggling after beginning the week with robust gains. The larger than expected supplies along with slowing economic recovery weighed on crude oil prices. The US oil trades below the $40 a barrel while Brent is hovering around $42 a barrel.
The American Petroleum Institute reported 951,000 barrels inventory build last week, significantly higher from expectations for 831,000-barrels.
Euro continues trading around the $1.18 level after falling to $1.15 level last week. The weakness in the greenback supported gains for the common currency. The USD index, which tracks the US dollar against the six major currencies, trades around 93.60 level today.