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Stocks - Europe Seen Higher; Virus Fears Retreat

Stock MarketsJan 22, 2020 02:08AM ET
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By Peter Nurse - European stock markets are set to open higher Wednesday, helped by a stronger tone out of Asia, as traders took a calmer approach to news of the emergence of a new virus in China - one which has now reached the U.S. and several other countries.

At 02:10 ET (0710 GMT), the DAX futures contract traded 84 points, or 0.6% higher. France's CAC 40 futures were up 38 points, or 0.6%, while the FTSE 100 futures contract in the U.K. rose 32 points, or 0.4%. Futures on the pan-eurozone Euro Stoxx 50, climbed 20 points, or 0.5%.

Earlier Wednesday, China’s public health officials confirmed more than 400 cases of coronavirus, with the death toll rising to nine, while the U.S. Centers for Disease Control and Prevention announced the first case of the illness in the United States. Additionally, authorities in Beijing said the country would start a nationwide screening effort to tackle the outbreak.

Hong Kong’s Hang Seng Index climbed 1.2% after closing down almost 3% yesterday, Japan’s Nikkei 225 advanced 0.6% and Shanghai blue chips 0.3%.

This new virus brings back memories, for those old enough, of the SARS pandemic in 2002. On that occasion more than 8,000 people across 37 countries were affected, with close to 800 deaths.

“What scared people about SARS is the mortality rate,” said Robert Carnell, Chief Economist Head of Research Asia-Pacific at ING, in a research note. But, “put into context, your chances of contracting and dying of SARS, were statistically far less than of dying of regular flu. But the response of the population of countries where there was a perceived greater risk, was huge. Presumably, the reasoning was, if I do get it, the odds aren't great.”

On Tuesday, the Dow Jones Industrial Average fell 151.25 points, or 0.5%, to 29,196.85, the S&P 500 lost 8.75 points, or 0.3%, to 3,320.87 and the Nasdaq Composite dropped 18.14 points, or 0.2%, to 9,370.81, as traders caught up with the news following the public holiday on Monday.

The World Economic Forum continues in Davos, Switzerland, Wednesday, although there will likely be less focus on the event after the star turn, U.S. President Donald Trump, spoke Tuesday.

In corporate news, car manufacturers are set to be in focus after overnight news from Japan that Toyota (T:7203) will recall 3.4 million vehicles worldwide for a defect that could impact air bags and seat belts. Additionally, South Korea's Hyundai (OTC:HYMLF) reported a better than expected quarterly operating profit, helped by brisk sales of sport-utility vehicles such as its Tucson and Palisade models.

Economic releases are limited in number Wednesday, with Italian industrial new orders and sales at 4:00 AM ET (0900 GMT). In the U.K., retail sales and the government borrowing statistics are due at 4:30 AM ET (0930 GMT) and the CBI Industrial Trends Orders survey is due at 6:00 AM ET (1100 GMT).

Elsewhere, the price of oil has retreated after the IEA forecast a market surplus in the first half of the year, despite the prospect of a near-total shutdown of production in OPEC member Libya.

"I see an abundance of energy supply in terms of oil and gas," head of the IEA, Fatih Birol, told the Reuters Global Markets Forum, while he was attending World Economic Forum meeting in Davos, Switzerland.

At 2:15 AM ET (07:15 GMT), U.S. crude futures traded 0,5% lower at $58.09 and the international benchmark Brent contract fell 0.4% to $64.33. Gold futures for February delivery on New York’s COMEX was 0.3% lower at $1,552.55.

Stocks - Europe Seen Higher; Virus Fears Retreat

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