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Investing.com – European stock markets traded lower Wednesday, with investors wary of chasing recent gains ahead of the second-quarter earnings season, while the European Central Bank signals it could now be on hold for some time.
At 3:35 AM ET (0735 GMT), the DAX in Germany traded 0.3% lower, France’s CAC 40 fell 0.5%, the U.K.’s FTSE index was down 0.2%.
In an interview with the Financial Times, published Wednesday, ECB President Christine Lagarde signaled the central bank may keep policy unchanged for some time after it almost doubled the size of its pandemic purchase program to 1.35 trillion euro ($1.52 trillion) last month.
There was some positive economic news to digest, as the French economy, the euro zone’s second biggest, is set to rebound 19% in the third quarter and a further 3% in the fourth quarter, according to estimates from the INSEE statistics agency Wednesday.
That said, over the course of the year, INSEE estimated that the economy was set to contract 9%, France’s worst recession since modern records began in 1948.
Meanwhile, the number of coronavirus cases keep on increasing globally. There are almost 11.8 million COVID-19 cases globally as of July 8, according to Johns Hopkins University data, including – as of Tuesday – Brazilian President Jair Bolsonaro, a vocal skeptic of the pandemic.
This has translated into caution on global equity markets. After several days of rallying, much of Wall Street turned lower on Tuesday. Asian markets and now Europe have largely followed suit, with an eye on what is likely to be a dismal earnings season.
“It’s not unusual for stocks to take a breather at this point,” Susan Schmidt, a portfolio manager at Aviva (LON:AV) Investors, told Bloomberg.
“We could see ourselves in a bit of a trading range in the next couple of weeks,” she added.
In corporate news, HSBC (LON:HSBA) stock dropped 3.4%, as the U.S. contemplates measures to sanction banks in Hong Kong after the passing of a new national security law in the city.
Boohoo (LON:BOOH) stock slumped 6.8% while facing a backlash from retailers following a report about dire working conditions in an English factory that supplied the popular brand.
On the flip side, Electrolux (ST:ELUXb) stock climbed 5.4% after it reported a smaller second-quarter loss than expected, driven by organic sales growth of 3% in June and successful cost cuts.
Oil prices weakened Wednesday, amid worries about a smaller than expected decline in U.S. crude oil production in 2020 and a rise in U.S. crude oil stockpiles. Government data are due later Wednesday.
At 3:40 AM ET, U.S. crude futures traded 0.1% lower at $40.58 a barrel. The international benchmark Brent contract fell 0.1% to $43.05.
Elsewhere, gold futures fell 0.2% to $1,806.65/oz, while EUR/USD traded at 1.1286, up 0.2%.
