By Peter Nurse
Investing.com – European stock markets are set to open lower Tuesday, consolidating after Monday’s sharp gains, as investors try to balance signs of a global economic recovery with concerns over the increasing number of new coronavirus cases in the U.S.
At 2:05 AM ET (0605 GMT), the contract in Germany traded 0.7% lower. in France were down 0.7%, while the contract in the U.K.fell 0.7%.
Sentiment was dampened slightly by German data, which rose by 7.8% in May, a sharp rebound from the drop of 17.5% in April, but slightly less than forecast. Factory orders data released on Monday had shown the same pattern.
Additionally, Italian oil major Eni joined larger rivals Shell (LON:) and BP (NYSE:) in flagging asset impairments of around 3.5 billion euros ($3.96 billion) due to a lower outlook for energy prices, while French food-services and facilities company Sodexo (PA:) said revenue for its third quarter of fiscal 2020 dropped 30% due to the pandemic.
The big European cash indices gained between 1.5% and 2% Monday, aided by a surge in Chinese shares as well as buying on Wall Street, backed by a sharp rebound in U.S. services industry activity in June.
That strong jump in the U.S. index, all the way to 57.1, was the latest in a string of June economic releases that offered hope that a meaningful global economic recovery was in progress.
However, the fly in the ointment is the ever-increasing number of Covid-19 cases globally, but particularly in the U.S.
New coronavirus cases have surged in several states–Texas, California and Florida registered record case levels over the holiday weekend–forcing some businesses to close again in a setback to the budding recovery. Atlanta Federal Reserve Bank President Raphael Bostic to say Monday that the U.S. economic recovery is in danger of stalling.
Oil prices edged lower Tuesday, as the continued growth of new coronavirus cases in the U.S., the largest consumer of crude, weighed on sentiment. The U.S. death toll surpassed 130,000 as of July 7, according to data from Johns Hopkins University.
Later on Tuesday, the American Petroleum Institute’s report on the level of will be in focus, after the previous week showed a draw of 8.1 million barrels. Investors will be looking to see whether the fresh wave of coronavirus infections impacted the consumption of oil across the country.
At 2:10 AM ET, futures traded 1.4% lower at $40.05 a barrel. The international benchmark contract fell 1.4% to $42.52.
Elsewhere, rose 0.1% to $1,794.45/oz, while traded at 1.1303, down 0.1%.
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