European stocks may open largely unchanged on Wednesday despite all three major U.S. stock indexes closing down nearly 3 percent overnight on concerns around a spreading coronavirus threat.
Mainland China had 119 new confirmed cases of coronavirus on Tuesday, the National Health Commission said, down slightly from 125 the previous day, in a broad trend that has seen numbers of new cases fall from the middle of February.
But infections are rising faster outside China, with Italy, South Korea and Iran all infection hot spots.
U.S. stock futures rebounded after Tuesday’s sharp decline as early voting showed former Vice President Joe Biden notching victories in key southern states including Virginia, North Carolina and Arkansas.
Asian markets reversed early losses to trade mostly higher as the Group of Seven major industrialized countries pledged support for the global economy but announced no specific measures.
The dollar hovered near five-month lows versus the yen after S&P Global Ratings cut its U.S. growth forecast for a second time, saying a rapidly spreading coronavirus outbreak will likely be a “material headwind” for the world’s largest economy.
Oil prices rose more than 1 percent to extend overnight gains on expectations that the Organization of Petroleum Exporting Countries and its allies will go ahead with additional output cuts this week.
In economic releases, the services sector in China fell deeply into contraction territory, the latest survey from Caixin revealed today with a Services PMI score of 26.5.
Final composite Purchasing Managers’ survey data and retail sales figures from euro area are due later in the session, headlining a busy day for the European economic news.
Across the Atlantic, reports on private sector employment and service sector activity may attract some attention, although news on the coronavirus front is likely to remain in the spotlight.
U.S. stocks ended sharply lower overnight and Treasury yields fell to historic lows as worries about the spread of coronavirus world-wide overshadowed words of assurance from G7 countries and a surprise inter-meeting 50 basis point interest-rate cut from the Federal Reserve.
In an accompanying statement, the Fed noted the coronavirus poses evolving risks to economic activity. Fed Chairman Jerome Powell indicated during a subsequent press conference that additional stimulus would come in the form of further rate cuts rather than tools like quantitative easing.
The Dow Jones Industrial Average dropped 2.9 percent, the tech-heavy Nasdaq Composite shed 3 percent and the S&P 500 declined 2.8 percent.
European markets ended Tuesday’s session on a firm note following the U.S. central bank’s decision.
The pan European Stoxx 600 advanced 1.4 percent. The German DAX and France’s CAC 40 index both climbed around 1.1 percent while the U.K.’s FTSE 100 index added 1 percent.
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