Stocks – Europe Seen Lower as Factory Activity Slumps in Asia

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Investing.com – European stock markets are set to open lower Wednesday, as more survey evidence of economic damage in Asia caused by the coronavirus pandemic outweighed talk of another rescue package in the U.S.

At 2:15 AM ET (0615 GMT), the DAX futures contract in Germany traded 2.5% lower. CAC 40 futures were down 3.9%, while the FTSE 100 futures contract in the U.K. fell 4.2%.

Factory activity dropped sharply across most of Asia in March, according to the latest Purchasing Managers’ Index surveys, with regional economic powerhouses Japan and South Korea, major exporters to Europe, posting their biggest contractions in about a decade.

The Bank of Japan’s “tankan” corporate survey showed Japanese manufacturers turned pessimistic for the first time in seven years.

The surveys illustrate the economic damage caused by the pandemic that has infected more than 850,000 people, killed over 42,000, upended supply chains and led to city lockdowns worldwide.

Surveys due later on Wednesday from countries including Germany and the United States are expected to do similarly little for investor confidence.

This news has overshadowed the possibility, raised by President Donald Trump, of more money being introduced into the system.

This would require Congressional approval, and is likely to run into political opposition given the vast sums of money already pledged to help the country’s economy recover from this shutdown.

In corporate news, the U.K. banking sector is likely to be in focus after the Hong Kong-listed shares of HSBC (LON:HSBA) and Standard Chartered (LON:STAN) plunged earlier Wednesday as both cancelled dividend payments at the U.K. financial regulator’s request.

The data barrage continues in Europe Wednesday, with manufacturing PMI data scheduled for the whole region. Eyes are likely to be on the U.S. ADP nonfarm employment data, at 8:15 AM ET (1215 GMT), ahead of Friday’s official payrolls release.

Oil markets declined again as the weak factory survey data out of Asia offered more evidence of the damage done to oil demand by the pandemic.

At 2:05 AM ET, U.S. crude futures traded 1.9% lower at $20.09 a barrel. The international benchmark Brent contract fell 3.7% to $25.38.

Elsewhere, gold futures rose 0.3% to $1,600.50/oz after another fall on Tuesday, while EUR/USD traded at 1.1021, down 0.1% on the day.