European Stock Futures Mixed; Caution Over Stimulus Messages

LEO 2020-11-20 16:49:29

By Peter Nurse - European stock markets are seen opening in a mixed fashion Friday, as investors grapple with conflicting reports involving U.S. stimulus while the surge in the number of coronavirus cases threaten the global economic recovery.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.3% while the FTSE 100 futures contract in the U.K. rose 0.1%. 

In a letter to U.S. Federal Reserve Chair Jerome Powell, released late Thursday, U.S. Treasury Secretary Steven Mnuchin requested the re-appropriation of some $455 billion allocated to the Treasury under the CARES Act earlier in the year, potentially ending the central bank’s relief programs.

The Fed swiftly responded by issuing its own statement urging that “the full suite” of facilities be kept in place.

This was the first serious sign of discord between the top two U.S. economic policymakers, and comes just after jobless claims rose for the first time in five weeks as restrictions put in place to combat the ongoing surge in Covid-19 cases halted the recovery in the country’s labor market.

That said, investors will have been buoyed by the news overnight that Republican Majority Leader Mitch McConnell had agreed to revive talks to craft a new fiscal relief package.

Back in Europe, European Central Bank President Christine Lagarde promised a forceful monetary stimulus package for December, while speaking to a European Parliament committee Thursday. 

She also urged governments to make pandemic-relief available “without delay”, as the euro-area economy is likely to be hit hard by the fallout from the rapid increase in infections and restrictions.

On the economic data slate, U.K. retail sales climbed 1.2% in October on the month, as the country’s consumers proved more resilient than expected.

Oil prices were largely unchanged Friday, despite concerns about demand growth given the growing number of coronavirus cases and signs of a slowdown in the U.S. labor market. 

U.S. crude futures traded flat at $41.90 a barrel, while the international benchmark Brent contract rose 0.1% to $44.25, both remaining well above the $40 mark after the gains earlier in the week on the back of vaccine optimism.

Elsewhere, gold futures rose 0.2% to $1,864.90/oz, while EUR/USD traded 0.1% higher at 1.1879.

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