Europe heads lower on lockdown fears
European bourses are pressed as nations such as Germany and France mull national lockdowns in a bid to stem the spread of resurging coronavirus.
Share this:
European markets are heading for a weaker open after a mixed performance on Wall Street as earnings and the upcoming elections prompted a cautious tone to trading. European bourses are further pressed as nations such as Germany and France mull national lockdowns in a bid to stem the spread of resurging coronavirus.
A national lockdown, as we have seen in Q2, ravages an economy and would add significant complications to the economic recovery. Whilst Germany and France are considering a lighter version than the lockdown seen in March, tighter lockdown restrictions have already resulted in business activity in the Eurozone contracting, tougher measures would deepen this contraction further, particularly in the service sector.
These moves will up the pressure on the ECB to deliver more stimulus to support the bloc’s fragile economy. Attention will turn to tomorrow’s ECB meeting. Whilst it is probably still too early to see any further action from the ECB this month, there is a very good chance that the central bank will tee up the market for further asset purchases in December.
Oil slumps 3%
Oil majors will be in focus as covid cases surge in Europe and US the price of oil is tumbling lower. Oil has skidded over 3% lower in early trade, paring gains from the previous session. Elevated US crude inventories coupled with soaring coronavirus infections in the US and Europe hitting the demand outlook have prompted fresh selling in oil and the bears to take back control. With covid on the rise movement in Europe and North America will be greatly reduced over Autumn and the winter months bringing oil demand right back down again. The lack of US fiscal stimulus is adding to the gloomy outlook for demand. At the same time output is once again ramping up in Libya, at a time that is least needed.
Oil majors will be in focus as covid cases surge in Europe and US the price of oil is tumbling lower. Oil has skidded over 3% lower in early trade, paring gains from the previous session. Elevated US crude inventories coupled with soaring coronavirus infections in the US and Europe hitting the demand outlook have prompted fresh selling in oil and the bears to take back control. With covid on the rise movement in Europe and North America will be greatly reduced over Autumn and the winter months bringing oil demand right back down again. The lack of US fiscal stimulus is adding to the gloomy outlook for demand. At the same time output is once again ramping up in Libya, at a time that is least needed.
Next upgrades FY profits (again)
British clothes retailer Next has impressed by upgrading its annual profit guidance after sales grew by more than expected in the third quarter. Full price sales jumped +2.8% in Q3 an Next now expects full year pre-tax profits to be £365 million, up £65 million from guidance in September.
Next’s sophisticated online offering has helped the online retailer to weather one of the most challenging storms seen by the retail sector in recent times. Next now does more than half of its sales online making it one of the few bricks and mortar retailers to successfully transition into e-commerce in a significant way.
The outlook for Next is still extremely challenging, particularly with tighter lockdown restriction being brought in and the prospect of Christmas being cancelled. The risk that an extending economic slowdown could see customers move away from the mid-market price point towards cheaper alternatives could also grow.
FTSE Chart
European markets are heading for a weaker open after a mixed performance on Wall Street as earnings and the upcoming elections prompted a cautious tone to trading. European bourses are further pressed as nations such as Germany and France mull national lockdowns in a bid to stem the spread of resurging coronavirus.
A national lockdown, as we have seen in Q2, ravages an economy and would add significant complications to the economic recovery. Whilst Germany and France are considering a lighter version than the lockdown seen in March, tighter lockdown restrictions have already resulted in business activity in the Eurozone contracting, tougher measures would deepen this contraction further, particularly in the service sector.
These moves will up the pressure on the ECB to deliver more stimulus to support the bloc’s fragile economy. Attention will turn to tomorrow’s ECB meeting. Whilst it is probably still too early to see any further action from the ECB this month, there is a very good chance that the central bank will tee up the market for further asset purchases in December.
Oil slumps 3%
Oil majors will be in focus as covid cases surge in Europe and US the price of oil is tumbling lower. Oil has skidded over 3% lower in early trade, paring gains from the previous session. Elevated US crude inventories coupled with soaring coronavirus infections in the US and Europe hitting the demand outlook have prompted fresh selling in oil and the bears to take back control. With covid on the rise movement in Europe and North America will be greatly reduced over Autumn and the winter months bringing oil demand right back down again. The lack of US fiscal stimulus is adding to the gloomy outlook for demand. At the same time output is once again ramping up in Libya, at a time that is least needed.
Oil majors will be in focus as covid cases surge in Europe and US the price of oil is tumbling lower. Oil has skidded over 3% lower in early trade, paring gains from the previous session. Elevated US crude inventories coupled with soaring coronavirus infections in the US and Europe hitting the demand outlook have prompted fresh selling in oil and the bears to take back control. With covid on the rise movement in Europe and North America will be greatly reduced over Autumn and the winter months bringing oil demand right back down again. The lack of US fiscal stimulus is adding to the gloomy outlook for demand. At the same time output is once again ramping up in Libya, at a time that is least needed.
Next upgrades FY profits (again)
British clothes retailer Next has impressed by upgrading its annual profit guidance after sales grew by more than expected in the third quarter. Full price sales jumped +2.8% in Q3 an Next now expects full year pre-tax profits to be £365 million, up £65 million from guidance in September.
Next’s sophisticated online offering has helped the online retailer to weather one of the most challenging storms seen by the retail sector in recent times. Next now does more than half of its sales online making it one of the few bricks and mortar retailers to successfully transition into e-commerce in a significant way.
The outlook for Next is still extremely challenging, particularly with tighter lockdown restriction being brought in and the prospect of Christmas being cancelled. The risk that an extending economic slowdown could see customers move away from the mid-market price point towards cheaper alternatives could also grow.
FTSE Chart
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD, FTSE 100 Forecast: Two trades to watch 1507
EUR/USD rises after weaker US CPI, PPI up next. FTSE 100 falls as weak China GDP data hits miners.
FTSE 100, USD/JPY Forecast: Two trades to watch
FTSE eases modestly despite inflation unexpectedly holding steady. USD/JPY drifts lower ahead of the FOMC rate decision.
EUR/USD, FTSE 100 Forecast: Two trades to watch 21-05-26
EUR/USD slips below 1.16 as weak eurozone data weighs on sentiment. FTSE 100 slips as oil prices rebound and caution returns.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.