Stocks – Europe Slides as Govt Packages Bring Only Temporary Relief

By Peter Nurse 

Investing.com – European stock markets are set to open sharply lower Wednesday, despite hefty gains on Wall Street overnight, as worries about the economic damage caused by the coronavirus pandemic hold sway over hopes that government policy moves will limit the fallout. 

At 03:20 ET (0720 GMT), the contract traded 331 points, or 3.8% lower. {{167|France’s were down 180 points, or 4.5%, while the contract in the U.K. fell 253 points, or 4.8%. Futures on the pan-eurozone index, the , dropped 91 points, or 3.8%. 

News that the Trump administration was putting together a $1 trillion stimulus package to tackle the outbreak helped Wall Street rebound on Tuesday, with the jumping 5.2%, or about 1,049 points, the gaining 6% and the added 6.2%.

This followed the U.K.unveiling a 330 billion-pound ($400 billion) rescue package for businesses while Spain joined France in announcing emergency credit facilities on a similar scale, along with other measures. 

However, the relief created by these policies has been short-lived as they are measured against the sheer scale of the economic damage likely. National and local governments across the U.S. and Europe are taking draconian measures to combat the virus, shutting restaurants, closing schools and calling on people to stay home.

The European Union agreed late Tuesday to close the bloc’s external borders for 30 days in a coordinated effort to contain the outbreak.  

Economic data Wednesday is set to center around the release of the euro zone’s consumer price inflation figure for February, at 06:00 AM ET (1000 GMT). The annual number is expected to be unchanged at 1.2%, still well off the European Central Bank’s target of close to 2%. 

Oil markets have continued to sell off, slumping to levels not seen since 2003, crushed between the destruction of demand brought upon by the coronavirus pandemic and the glut of supply as two of the globe’s largest producers, Saudi Arabia and Russia, indulge in a price war aimed at winning back market share from U.S. producers.

AT 03:2AM ET (0720 GMT), futures traded 1.9% lower at $26.82 a barrel, having fallen as low as $26.63, which would be the lowest settlement price since May 2003. The international benchmark contract fell 1.5% to $28.30. 

Additionally, fell 0.9% to $1,512.90/oz, while traded at 1.1002, up 0.1% on the day.

 

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