European Stocks Seen Higher as U.S. Stimulus Hopes Grow By

© Reuters.

By Peter Nurse – European stock markets are seen opening higher Wednesday, helped by increased confidence for a new U.S. stimulus package to boost the world’s largest economy.

At 2:05 AM ET (0605 GMT), the contract in Germany traded 0.4% higher, in France climbed 0.2% and the contract in the U.K. rose 0.1%. 

The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package on Tuesday as President Donald Trump said he was willing to accept a large aid bill, in an attempt to get a deal done before the Nov. 3 election.

Negotiations between House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin will continue on Wednesday.

However, even if these two parties do come to an agreement, there’s no guarantee it will be signed into law as Republican Senators’ opposition to the measures’ price tag remains strong.

The impact of the coronavirus outbreak on the global economy was illustrated by a United Nations report Wednesday, which said the value of global trade is set to fall by 7% to 9% in 2020 from the previous year.

Back in Europe, a second wave of the Covid-19 outbreak continues to cause havoc, with Spain now considering curfews in hard-hit regions like Madrid in a bid to tackle potential contagion. France has already imposed curfews on some of its major cities, including Paris, while the U.K. put a further 3 million people in the Greater Manchester into its ‘tier 3’ lockdown category on Monday, closing many non-essential businesses.

In corporate news, Nestle (SIX:) will be in focus after the world’s biggest foods group raised its guidance for organic sales growth for 2020 after posting better-than-expected growth for the third quarter. The results were driven by strong demand for pet food and health products.

Additionally, Ericsson (BS:) reported quarterly core earnings ahead of market estimates, helped by a lift in margins across its businesses, and said it was “more confident” in meeting its 2020 targets.

Economic data centers around U.K. inflation numbers Wednesday, with September rising 0.5% on the year, an increase from the 0.2% figure seen the previous month. 

Oil prices fell Wednesday after a surprise climb in stockpiles from an industry report increased worries about excess supply in a market already concerned about the impact on demand from the Covid-19 surge.

The American Petroleum Institute reported a 584,000-barrel in the week to Oct. 16, against a forecast 1.9-million-barrel draw. Investors are now looking to from the U.S. Energy Information Administration, due later in the day, for corroboration.

U.S. crude futures traded 0.8% lower at $41.38 a barrel, while the international benchmark contract fell 0.9% to $42.78.

Elsewhere, rose 0.2% to $1,918.70/oz, while traded 0.2% higher at 1.1849.

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