By Peter Nurse
Investing.com - European stock markets are seen opening mixed Wednesday, with investors weighing up a dramatic drop in U.K. gross domestic product as well as uncertainty over the extent of additional U.S. fiscal stimulus.
At 2:15 AM ET (0615 GMT), the DAX futures contract in Germany traded 0.3% higher, the FTSE 100 futures contract in the U.K. rose 0.1%, while CAC 40 futures in France fell 0.5%.
The U.K. officially entered recession Wednesday for the first time since the financial crisis in 2008 after the Office for National Statistics confirmed that the U.K. economy shrank by 20.4% in the second quarter, after dropping by 2.2% in the first. The U.K. economy suffered worse than any other major European nation during the coronavirus lockdowns.
Helping the tone was the marked improvement in activity in June as GDP rose 8.7% month-on-month as lockdown restrictions eased, noted Howard Archer, chief economic advisor at EY ITEM Club, in a tweet.
There remains uncertainty over whether U.S. lawmakers will agree to an additional round of big fiscal stimulus, after Senate Majority Leader Mitch McConnell stated late Tuesday that talks over coronavirus relief were at a stalemate.
Barring what now seems an unlikely bipartisan deal, the U.S. economy could be left with the measures proposed by U.S. President Donald Trump via executive orders to bypass Congress over the weekend.
Getting the two sides together may become more difficult now as the U.S. election campaigns look set to gather steam with Democratic presidential candidate Joe Biden selecting Senator Kamala Harris as his choice for vice president.
In corporate news, E.ON is likely to be in the spotlight after Germany’s largest energy group cut its outlook for the current year as the coronavirus crisis hit its networks and retail business in the second quarter.
Online food ordering company Just Eat Takeaway.com reported higher revenues and underlying profit for the first half of the year as the coronavirus pandemic led to a surge in orders.
Oil prices pushed higher, boosted by an industry report showing that U.S. stocks of crude fell more than had been expected last week, indicating that the recovery in fuel demand is still intact.
Data released late Tuesday by the American Petroleum Institute showed a larger than expected draw in crude inventories of 4.4 million barrels for the week to Aug. 7, versus a 3.2-million-barrel forecast. Official government numbers are due later Wednesday.
Additionally, the Organisation of Petroleum Exporting Countries will also release its monthly market report later Wednesday, which will include their production numbers for July, along with the group’s outlook on demand for the remainder of this year and 2021.
U.S. crude futures traded 0.9% higher at $41.97 a barrel, while the international benchmark Brent contract rose 0.9% to $44.91.
Elsewhere, gold futures slumped another 2% to $1,906.60/oz, continuing this week’s sharp selloff after the yellow metal had registered all-time highs above $2,000. EUR/USD traded 0.1% lower at 1.1734.