By Peter Nurse
Investing.com - European stock markets are set to open mixed Tuesday, with investors having to weigh concerns about the rising confirmed coronavirus cases and increasing Sino-U.S. tensions with healthier economic data as the new earnings season starts.
At 2:15 AM ET (0615 GMT), the DAX futures contract in Germany traded 0.3% higher, while the FTSE 100 futures contract in the U.K. fell 1%. France was on holiday.
Earlier Tuesday, China reported positive customs data, an encouraging sign that the world’s second largest economy is recovering from the damage caused by the Covid-19 virus. Chinese exports and imports benefited from some countries loosening lockdown measures, and the resultant uptick in economic activity.
The British economy also grew 1.8% in May, only a slight rebound after the deep fall caused by the shutdown from the coronavirus pandemic. Analysts had predicted an expansion of 5.5%.
U.K. industrial production was still down 20% year-on-year in May, and manufacturing output down 22.8% on the year.
Elsewhere, the Covid-19 virus continued to wreak havoc, as the total number of cases climbed over 13 million cases globally, according to data from Johns Hopkins University, surging by a million in five days.
In the U.S., the most populous state California reshuttered bars and ordered restaurants and movie theatres to cease indoor operations. The move is the clearest signal yet that the U.S. will have to reimpose economically damaging measures to bring the spread of the virus back under control.
Adding to the cocktail of concerns, tensions between the U.S. and China continued to simmer, with the two sides waging a war or words over China’s claims in the South China Sea.
In corporate news, Swatch Group (SIX:UHR) said Tuesday that it swung to a loss during the first half of the year due to the closure of most of its stores during the coronavirus pandemic. U.K. online food retailer Ocado (LON:OCDO) meanwhile reported 27% growth in revenue and a narrower pretax loss in its first-half report.
Eyes will turn later in the session to the start of the U.S. earnings season, with big banks beginning to report second-quarter results. The expectations are that they will show weakness along with the broader market because of Covid-19 shutdowns, which dominated much of the quarter.
Oil prices weakened sharply Tuesday, amid worries for the recovery of crude demand as California, the most populous U.S. state, ordered a new lockdown on businesses to combat the resurgence of the Covid-19 virus.
This comes ahead of a meeting of OPEC’s technical staff, on Tuesday and Wednesday, who are expected to recommend the group and its allies, including Russia, stick with the current plan to taper its record supply cut of 9.7 million barrels per day to 7.7 million barrels per day from August through December.
The market will also be closely watching data on oil inventories due later on Tuesday from the American Petroleum Institute and on Wednesday from the U.S. Energy Information Administration.
At 2:15 AM ET, U.S. crude futures traded 2% lower at $39.29 a barrel, while the international benchmark Brent contract fell 1.4% to $42.14.
Elsewhere, gold futures fell 0.7% to $1,801.75/oz, while EUR/USD traded at 1.1340, flat on the day.