Europe Seen Lower; Banking Sector in Focus By

Europe Seen Lower; Banking Sector in Focus By

© Reuters.

By Peter Nurse – European stock markets are seen opening just lower Wednesday, as doubts emerge over the timing of new stimulus in he U.S. while results from Deutsche Bank , Barclays  and Santander put the banking sector in the spotlight.

At 2:05 AM ET (0605 GMT), the contract in Germany traded 0.1% lower, the contract in the U.K. fell 0.3%, while in France dropped 0.1%.

President Donald Trump expressed dissatisfaction late Tuesday about some aspects of the $1 trillion stimulus package hammered out with fellow Republicans.

This suggests a lack of unity in the Republican Party camp that makes it difficult for Treasury Secretary Steven Mnuchin to broker a deal with Democratic leaders in Congress by Friday, when the $600-per-week enhanced coronavirus unemployment benefit is due to expire.

Meanwhile, the pandemic continues to rage in parts of the U.S., hot spots in Europe and across big emerging economies including India and Brazil. Governments are having to double down on the vast amounts of stimulus and unprecedented central bank support unleashed since the crisis began. 

Global Covid-19 deaths have topped 659,000, with the number of cases beating 16.7 million as of July 29, according to Johns Hopkins University data.

The day will be dominated by the U.S. Federal Reserve’s policy decisions and press conference at 2 PM ET (1800 GMT). The Fed isn’t expected to change its interest rates or bond-buying policy but on Tuesday extended most of its emergency lending facilities for another three months. Some have speculated that Chairman Jerome Powell may indicate a future further loosening of policy at his press conference.

In Europe, the focus will be on bank earnings, where huge provisions against loan losses loomed large.

German’s Deutsche Bank (DE:) posted a second-quarter loss despite a strong performance at its investment bank, as it put aside 761 million euros ($891.5 million) to cover credit losses.

Santander (MC:) also reported a 12.6 billion-euro impairment, resulting in an unexpected heavy loss, while Barclays (LON:) set aside 1.6 billion pounds.

Belgian chemicals company Solvay (BR:) reported a fall in second-quarter net profit as the pandemic hurt demand. It expects a challenging third quarter.

Elsewhere, Sanofi (PA:) and GlaxoSmithKline (LON:) have signed a deal to supply Britain with up to 60 million doses of a possible Covid-19 vaccine the pair are developing.

Oil prices were largely unchanged, with a surprise drop in U.S. inventories having little impact upon a market still concerned about the potential hit to fuel demand from the pandemic.

The American Petroleum Institute reported late Tuesday that dropped by 6.8 million barrels last week. U.S. government are due later.

futures traded 0.2% higher at $41.12 a barrel, while the international benchmark fell 0.3% to $43.74.

Elsewhere, rose 0.1% to $1,947.30/oz, still at highly elevated levels, while traded at 1.1737, up 0.2%.

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