By Peter Nurse
Investing.com - European stock markets weakened Tuesday, as investors banked some of the gains from the previous session, fretting about the damage the ongoing coronavirus pandemic is doing to the region’s economy.
At 4:05 AM ET (0805 GMT), the DAX in Germany traded 1% lower, the CAC 40 in France fell 0.7% and the U.K.'s FTSE index dropped 1%.
The global death toll from Covid-19 pandemic rose past 1 million on Tuesday, according to data from Johns Hopkins University, with the death rate increasing in recent weeks as infections surged in several countries.
Europe accounts for nearly 25% of the deaths, and the World Health Organization has warned of a worrying spread in western Europe just weeks away from the winter flu season.
French consumer confidence held steady in September, as INSEE's consumer confidence index held at 95, after a single point upwards revision for the month of August. This is reasonably good news, but last week’s PMI data showed Europe’s recovery had stalled, with the dominant services sector dropping below 50.
European Central Bank President Christine Lagarde said Monday that the region’s central bank is ready to deploy more monetary stimulus to aid the recovery if needed, but this is likely to take some time to be agreed upon. Preliminary CPI data from German states suggest no real weakening in consumption trends this month. Spain's CPI stayed firmly in negative territory at -0.6% on the year.
Over in the U.S., Democratic lawmakers unveiled late Monday a new $2.2 trillion coronavirus relief bill, but it’s doubtful this will pass through the Republican-dominated Senate before November’s elections.
Investors will also be keeping a wary eye on the first debate between U.S. President Donald Trump and rival Joe Biden, which takes place later Tuesday, while Brexit talks between the U.K. and the EU have moved forward to the point where EU negotiators are willing to start writing the legal text of an agreement on relations after the end of the current transition period.
In corporate news, the airlines and travel sector has been hit amid further restrictions as the pandemic continues. Air France KLM (OTC:AFLYY) fell 4%, IAG (LON:ICAG), the owner of British Airways, dropped 2.4% and Tui (DE:TUIGn) fell 3.4%.
The same fears had a knock-on effect on oil prices. U.S. crude futures traded 0.8% lower at $40.27 a barrel, while the international benchmark Brent contract fell 0.7% to $42.56.
The market will be looking for signs of U.S. demand growth in inventory data due on Tuesday from the American Petroleum Institute and the Energy Information Administration on Wednesday.
Elsewhere, gold futures rose 0.2% to $1,885.75/oz, while EUR/USD traded 0.1% higher at 1.1669.