By Peter Nurse
Investing.com - European stock markets traded lower Tuesday, as a smaller than expected rebound in German industrial production pointed to a slow and drawn-out recovery, particularly given the increasing number of new coronavirus cases globally.
At 3:45 AM ET (0745 GMT), the DAX in Germany traded 1% lower, France's CAC 40 fell 1%, the U.K.'s FTSE index was down 1.1%.
Sentiment was dampened by German industrial production data, which rose by 7.8% in May, a sharp rebound from the drop of 17.5% in April, but slightly less than forecast. Factory orders data released on Monday had shown the same pattern.
The two indicators suggest that the European industrial powerhouse has put the worst of the coronavirus lockdown behind it. But production is still well below the levels recorded before the onset of the pandemic, indicating that the recovery is going to take some time.
The corporate picture still looks very weak.
Italian oil major Eni (MI:ENI) stock fell 0.7% after joining larger rivals Shell (LON:RDSa) and BP (NYSE:BP) in flagging asset impairments of around 3.5 billion euros ($3.96 billion) due to a lower outlook for energy prices, noting the coronavirus pandemic would have a lasting impact.
French food-services and facilities company Sodexo (PA:EXHO) stock dropped 2.2% after saying revenue for its third quarter of fiscal 2020 dropped 30% due to the pandemic.
Additionally, Premier Inn owner Whitbread (LON:WTB) stock slumped 3.8% after it reported sales plummeted 80% in a quarter ravaged by lockdowns.
On a brighter note, JD (NASDAQ:JD) Sports (LON:JD) stock rose 2.3% after the sports-goods retailer reported a rise in pretax profit for fiscal 2020, but it still expects fiscal 2021 to be materially hurt by the pandemic.
The ever-increasing number of Covid-19 infections, particularly in the U.S., are causing concerns given the importance of America to the world economy. Atlanta Federal Reserve Bank President Raphael Bostic warned Monday that the U.S. economic recovery is in danger of stalling, after Texas, California and Florida registered record case levels over the holiday weekend--forcing some businesses to close again.
Oil prices edged lower Tuesday, and the focus will turn to the American Petroleum Institute's report on the level of inventories, after the previous week showed a draw of 8.1 million barrels. Investors will be looking to see whether the fresh wave of coronavirus infections impacted the consumption of oil across the country.
At 3:50 AM ET, U.S. crude futures traded 1.1% lower at $40.20 a barrel. The international benchmark Brent contract fell 0.8% to $42.74.
Elsewhere, gold futures fell 0.2% to $1,790.25/oz, while EUR/USD traded at 1.1288, down 0.2%.