European stock markets boosted by Wall Street gains
Stock markets in Europe are set open higher Tuesday, helped by record highs at Wall Street and news from China suggesting that much of the workforce will return to work within a week
European stock markets are set open higher Tuesday, helped by Wall Street posting record highs overnight and news from China suggesting that much of the workforce will have returned to work within a week.
In European stock markets, the DAX futures contract traded 63 points, or 0.5% higher. France’s CAC 40 futures were up 25 points, or 0.4%, while the FTSE 100 futures contract in the U.K. rose 31 points, or 0.4%. Futures on the pan-eurozone index, the Euro Stoxx 50, climbed 14 points, or 0.4%.
Overnight Monday, both the S&P and Nasdaq made a positive start to the week, closing at record highs as strong gains for mega-cap tech stocks overshadowed concerns about the coronavirus impact.
The S&P 500 rose 0.7%, Nasdaq Composite added 1.1% and the Dow Jones Industrial Average gained 0.6%.
Earlier Tuesday, the Chinese Ministry of Transport said 160 million people would return to work by next Monday, according to the Global Times.
Still, the death toll from the virus has climbed over 1,000 in mainland China and infected over 40,000 people. And measures of returning workers and passenger traffic flows within China suggested the virus had “a devastating impact on China’s economy in January and February,” said analysts at Nomura in a research note.
We are concerned that global markets thus far appear to be significantly underestimating the extent of disruption inflicted by the virus, they wrote.
Chinese authorities are trying to lessen the damage, with President Xi Jinping saying the government would prevent large-scale layoffs caused by the virus outbreak.
But companies are already feeling the pinch, and the market expects more stimulus from Beijing — even though it’s debatable what can be done in the near term to reverse a sharp slump in demand.
In Europe, Daimler is likely to be in focus Tuesday after the luxury car manufacturer said its net profit fell to 2.7 billion euros in 2019, from 7.6 billion euros in the year earlier, while cutting its dividend to 0.90 euros ($0.9818) a share from 3.25 euros in an effort to conserve cash as it struggles with an expensive transition to electric vehicles.
European holiday company Tui said it was expecting the grounding of the Boeing 737 MAX aircraft to cost it an additional 220 million euros to 245 million euros over its 2020 financial year, while reporting its first-quarter results on Tuesday.
Sensor specialist AMS on Tuesday reported fourth-quarter revenues above its own forecast amid strong demand for high-end smartphones, but warned revenues in the first quarter would decrease, without blaming the impact of the coronavirus.
In Europe, a speech by European Central Bank President Christine Lagarde is awaited. The central bank is in the middle of a major strategic review, and any comments from Lagarde over whether it changes its inflation goal will be of interest.
Elsewhere, the oil market has pushed higher Tuesday, rebounding a touch after recent losses. The market is still looking at potential cuts to supply from the club of major oil producers.
AT 02:15 AM ET (0715 GMT), U.S. crude futures traded 1.1% higher at $50.09 and the international benchmark Brent contract rose 1.1% to $53.88.
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