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Investing.com – European stock markets are seen opening lower Wednesday, giving back some of Tuesday’s sharp gains as investors fret that a tightly fought U.S. presidential election will not see an immediate clear cut victory, prolonging the uncertainty potentially for some time to come.
At 3 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.8% lower, CAC 40 futures in France dropped 0.5% and the FTSE 100 futures contract in the U.K. fell 0.3%.
President Donald Trump and his Democratic challenger Joe Biden are currently locked in a tight race for the White House, overturning earlier hopes for a unambiguous decision, and raising the likelihood that the final verdict won’t be known for several days.
Trump has won Florida, Iowa and Ohio, critical battleground states, yet Biden looks to have claimed Arizona, a state the current president claimed four years ago. Several key states, including Michigan, Pennsylvania and Wisconsin, are still counting, and that could take some time due to the unprecedented number of mail-in votes.
The major European cash indices closed markedly higher Tuesday, with the DAX gaining 2.6%, the CAC 40 2.4% and the FTSE 100 2.3%. These gains were largely down to investor optimism that, with Biden holding a clear lead in the national polls, the Democrats could take control not only of the White House but also the Senate. This would likely result in a substantial coronavirus relief package being passed.
However, “the likelihood for the Senate flipping to the Democrats has seriously decreased,” said Nordea analyst Andreas Steno Larsen, in a live blog. “It is still possible, but the main guess currently is that we will have a continued Republican majority. The probability for a BIG stimulus package is thereby reduced markedly.”
Aside from the U.S. election news, China’s services sector saw a sixth consecutive month of growth in October, as the world’s second largest economy continues to rebound strongly from its coronavirus hit.
The Caixin Services Purchasing Managers Index rose to 56.8 in October, higher than the previous month’s 54.8 reading and above the 50-mark separating growth from contraction.
This is good news with the European equivalent figures are due for release later Wednesday. But with the region suffering badly from the second wave of the Covid-19 virus, these strong figures are unlikely to be matched.
In corporate news, BMW (DE:BMWG) said its third-quarter profit rose almost 10% thanks to rebounding Chinese demand for luxury cars and reiterated its outlook despite the new lockdowns in Europe.
Oil prices pushed higher Wednesday after U.S. inventories dropped sharply last week, according to industry data, helping counter worries about lockdowns given rising coronavirus cases and rising supply from Libya.
U.S. crude stockpiles fell steeply by 8 million barrels for the week ending October 30, according to the latest American Petroleum Institute data, released late Tuesday. This compares with the small 600,000-barrel build expected.
U.S. crude futures traded 2.4% higher at $38.58 a barrel, while the international benchmark Brent contract rose 1.3% to $40.22, climbing back above the $40 level.
Elsewhere, gold futures fell 0.7% to $1,897.70/oz, while EUR/USD traded 0.6% lower at 1.1641.
