By Peter Nurse
Investing.com - European stock markets are set to open lower Wednesday, with investors wary of chasing recent gains ahead of the second-quarter earnings season, while the European Central Bank signals it could now be on hold for some time.
At 2:10 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.3% lower. CAC 40 futures in France were down 1.1%, while the FTSE 100 futures contract in the U.K. fell 1.1%.
In an interview with the Financial Times, published Wednesday, ECB President Christine Lagarde signaled the central bank may keep policy unchanged for some time after it almost doubled the size of its pandemic purchase program to 1.35 trillion euro ($1.52 trillion) last month.
“We have done so much that we have quite a bit of time to assess [the incoming economic data] carefully,” Lagarde said, adding that the measures taken so far have “demonstrated their efficiency, their effectiveness.”
Meanwhile, the number of coronavirus cases keep on increasing globally. There are almost 11.8 million COVID-19 cases globally as of July 8, according to Johns Hopkins University data, including - as of Tuesday - Brazilian President Jair Bolsonaro, a vocal skeptic of the pandemic.
The World Health Organisation warned Tuesday it would not "be surprised" if the global death toll from the coronavirus begins to rise following an increase in infections.
Atlanta Federal Reserve Bank President Raphael Bostic warned on Tuesday that ‘there is a real sense this might go on longer than we have planned for.”
This has translated into caution on global equity markets. After several days of rallying, much of Wall Street turned lower on Tuesday. Asian markets have also largely slipped back earlier Wednesday, and Europe looks set to follow suit.
“It’s not unusual for stocks to take a breather at this point,” Susan Schmidt, a portfolio manager at Aviva (LON:AV) Investors, told Bloomberg.
“We could see ourselves in a bit of a trading range in the next couple of weeks,” before the U.S. earnings season ramps up, she added.
Turning back to Europe, HSBC (LON:HSBA) is likely to be in focus after the Asia-focused, bank's shares fell almost 3% in Asian trade as the U.S. contemplates measures to sanction banks in the city after the passing of a new national security law in Hong Kong.
Oil prices weakened Wednesday, after the U.S. Energy Information Administration said it expects U.S. crude oil production to fall by 600,000 barrels a day in 2020, a smaller decline than the 670,000 barrels it forecast previously, prompting worries of oversupply.
Additionally, the American Petroleum Institute said U.S. crude oil stockpiles rose by 2 million barrels last week, defying expectations of a draw. Government data are due later Wednesday.
At 2:10 AM ET, U.S. crude futures traded 0.7% lower at $40.34 a barrel. The international benchmark Brent contract fell 0.6% to $42.84.
Elsewhere, gold futures fell 0.3% to $1,805.15/oz, while EUR/USD traded at 1.1267, down 0.1%.