European Stocks Seen Higher; Lockdowns Put Pressure on ECB

European stock markets are seen opening higher Thursday, bouncing after Wednesday’s sharp losses, as investors look to the European Central Bank for help. At 2:20 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France and the FTSE 100 futures contract in the U.K. were flat. 

The major European indices post hefty losses Wednesday, with the DAX ending down 4.2%, while the CAC 40 fell 3.4% and the FTSE 100 were down 2.6%. The news on Wall Street wasn’t much better, with the S&P 500, for example, closing 3.5% lower, its biggest drop since June 11.

The prime reason behind these losses was the announcement of additional measures to try and combat the new surge in Covid-19 cases, as France closed all non-essential businesses and Germany shut its hospitality industry for a month and banned most social gatherings. Italy and Spain have already imposed partial lockdowns.

With this in mind, investors will look to the European Central Bank for guidance after its governing council meeting later in the day. 

“The ECB is moving closer towards more action, but it is too early to do so this month. While we look for a dovish bias and hints at more asset purchases (to come in December) this should not catch markets off guard,” said analysts at ING, in a research note.

That said, this decision has become more difficult as the continent-wide lockdowns will not only threaten another severe economic slump and will also put already stretched government budgets under more strain.

In corporate news, Nokia (NYSE:NOK) is likely to be in focus after the Finnish telecom network equipment maker reported disappointing third-quarter underlying profits in its first earnings report under new Chief Executive Pekka Lundmark.

Volkswagen (DE:VOWG_p) returned to a profit in the third quarter, reporting better-than-expected sales in the period, helped by robust demand in China, while Anheuser Busch Inbev (BR:ABI), the world’s largest brewer, reported impressive earnings on the back of strong demand in the U.S. and Brazil.

Oil prices edged higher Thursday, rebounding to a degree after the sharp falls from the previous session, helped by the shuttering of a large percentage of U.S. output in the Gulf of Mexico as Hurricane Zeta hit the coast of Louisiana.

However, Hurricane Zeta’s impact is likely to be short-lived, and the market will likely soon return to fretting about the surge in coronavirus cases and its impact on demand. U.S. Energy Information Administration data Wednesday showed U.S. crude stockpiles rose by 4.3 million barrels last week.

U.S. crude futures traded 0.1% higher at $37.44 a barrel, while the international benchmark Brent contract was flat at $39.64. Both contracts fell around 5% on Wednesday.

Elsewhere, gold futures rose 0.2% to $1,882.40/oz, while EUR/USD traded largely flat at 1.1746.

8 views0 comments
  • Instagram
  • Facebook
  • Twitter
  • LinkedIn


Caution: Trading involves the possibility of financial loss. Only trade with money that you are prepared to lose, you must recognise that for factors outside your control you may lose all of the money in your trading account. TheForexCentre Ltd and its representatives take no responsibility for loss incurred as a result of trading. By signing up as a member you acknowledge that we are not providing financial advice. We have no knowledge on the level of money you are trading with or the level of risk you are taking with each trade. You must make your own financial decisions, we take no responsibility for money made or lost as a result of advice on Forex related products on this website. 

TheForexCentre Ltd and its representatives are not responsible for your actions. You are solely responsible for your own moves and decisions and the evaluation and use of our products and services should be based on your own due diligence. You agree that TheForexCentre Ltd and its representative's programs are not liable to you in any way for your results in using our products and services.


We are not financial advisers. ​​

© 2018-2020 TheForexCentre Ltd. All Rights Reserved