European stocks may open lower on Wednesday as renewed concerns about a spreading coronavirus epidemic eclipsed stimulus hopes.
The virus so far infected close to 200,000 people worldwide and killed more than 7,500. Imported coronavirus cases in China outpaced local infections for the 5th day.
The Trump administration pressed on Tuesday for enactment of a $1 trillion stimulus package that could deliver $1,000 cheques to Americans within two weeks to buttress an economy hit by coronavirus outbreak that has killed over 100 people in the country.
Concerns about the long-term outlook over U.S. fiscal health put pressure on long-term U.S. government bonds.
Britain unveiled an unprecedented £350 billion (€400 billion) financial rescue package to “support jobs, incomes and businesses” on Tuesday. France said it would spend 45 billion euros ($50 billion) to help small businesses and employees struggling with the coronavirus outbreak.
The Federal Reserve on Tuesday took another step to ease funding stress among corporates by reopening its Commercial Paper Funding Facility to underwrite short-term corporate loans.
Asian markets are trading mixed after Morgan Stanley warned investors that the seismic waves of COVID-19 are likely to trigger a global recession.
In another development, Goldman Sachs has cut its estimate for China’s first-quarter gross domestic product to a year-on-year contraction of 9 percent, from a previous forecast of 2.5 percent growth, underscoring how the coronavirus has disrupted normal business activities.
The dollar held firm against most currencies and gold extended gains into a second day, while oil prices steadied after sliding to their lowest in four years.
U.K. consumer spending increased for the first time since September 2018, a survey compiled by IHS Markit on behalf of Visa, showed earlier today. The consumer spending index grew 0.6 percent on a yearly basis in February, following a 1.8 percent fall in January.
Final inflation and foreign trade figures are due from the euro area later in the session, headlining a light day for the European economic news.
The U.S. economic calendar remains light, with a report on new residential construction scheduled to be released later in the day.
Overnight, U.S. stocks rose sharply after President Trump pledged to support industries that have been hit particularly hard by the virus outbreak.
While the Fed announced a special lending program “to support the flow of credit to households and businesses,” Treasury Secretary Steven Mnuchin said that the administration is hoping to get cash into Americans’ pockets “immediately.”
The Dow Jones Industrial Average jumped 5.2 percent, the tech-heavy Nasdaq Composite rallied 6.2 percent and the S&P 500 climbed 6 percent.
European markets ended a choppy session higher on Tuesday as the European Union closed its external borders and the White House outlined plans to combat the economic slowdown from the coronavirus.
The pan European Stoxx 600 advanced 2.3 percent. The German DAX surged 2.3 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 gained around 2.8 percent.
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