By Peter Nurse
Investing.com - European stock markets reversed early losses Thursday, with a rebound in consumer confidence in Germany helping to stem the drop in market confidence caused by increasing U.S. coronavirus cases and a global growth downgrade from the International Monetary Fund.
At 4:30 AM ET (0830 GMT), the DAX in Germany traded 0.8% higher, France's CAC 40 rose 0.5%, the U.K.'s FTSE index was down 1.4%.
The GfK German consumer climate survey showed a more significant improvement in sentiment in Europe’s most important economy than expected, with the July number coming in at -9.6, compared with the expected -12, and a jump from -18.6 the previous month.
However, this initially failed to stem the drop in market confidence prompted by International Monetary Fund cutting its 2020 global output forecasts further on Wednesday, saying the coronavirus pandemic has caused more damage to the world economy than first thought.
Adding to the woe was a surge in coronavirus cases in the U.S., particularly in the states where restrictions were lifted early. This prompted the governors of New York, New Jersey and Connecticut to announce that visitors from states with high coronavirus infection rates must self-quarantine for 14 days on arrival, increasing fears of fresh lockdowns in the world’s largest economy.
Attention will turn later in the session on the release of the minutes from the last meeting of the European Central Bank’s monetary policy committee, the meeting where the central bank increased its pandemic emergency purchase programme by 600 billion euros.
In corporate news, German payments provider Wirecard (DE:WDIG) succumbed to the inevitable and filed for insolvency, three days after admitting to a $2.1 billion hole in its accounts.
Lufthansa (DE:LHAG) stock soared more than 14% after the company's biggest private shareholder Heinz Herrmann Thiele dropped his opposition to the government's proposed 9 billion euro bailout of the airline, which announced separately a deal with a labor union that should save it 500 million euros a year.
Staying in the sector, rival easyJet (LON:EZJ) slumped 5.4% after launching a 450 million pounds ($558 million) rights issue to shore up its cash reserves in the face of the Covid-19 crisis.
Unite Group (LON:UTG) also raised 300 million pounds ($373 million) via a share placing, with the student-accommodation builder’s stock falling 2.4%.
Bayer (DE:BAYGN) stock climbed 0.3% after agreeing to pay up to $10.9 billion to settle tens of thousands of lawsuits with U.S. plaintiffs alleging one of the company’s products causes cancer, bringing a prolonged legal battle.
Oil weakened Thursday, extending the previous session’s hefty losses as record high U.S. crude inventories revived fears of a supply glut amid concerns about a hit to fuel demand from a resurgence in Covid-19 cases.
Wednesday's selloff came after U.S. government data showed crude stockpiles rose by 1.4 million barrels, driving inventories to a record high for a third straight week last week.
At 4:30 AM ET, U.S. crude futures traded 0.9% lower at $37.74 a barrel. The international benchmark Brent contract fell 0.6% to $40.07.
Elsewhere, gold futures were up 0.1% at $1,776.75/oz, while EUR/USD traded at 1.1240, down 0.1%.