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European Markets Likely To Open On Cautious Note

stockmarkets aug20 15sep20 lt

European markets are likely to open on a cautious note on Tuesday with investors reacting to the latest batch of economic data from the zone and updates on Brexit, and looking ahead to the Federal Reserve's monetary policy announcement.

Markets will be eyeing the Federal Reserve's views on economic outlook amid the coronavirus pandemic, its take on inflation and interest rates for directional clues.

The Bank of England and the Bank of Japan are also scheduled to announce their policies this week.

Worries about surging coronavirus cases may dampen the mood. Earnings and other corporate news are the other factors that would set the trend for stocks.

On Monday, the British parliament voted on the controversial Internal Market Bill. The bill, which is a contravention of the UK's divorce treaty with the EU, was passed by the House of Commons by 340 to 263.

Data showing a notable increase in China's industrial output is likely to aid sentiment and limit markets' weakness, if any. According to the National Bureau of Statistics, industrial production in China was up 5.6% on year in August, beating expectations for a 5.1% increase. In July, industrial production had increased by 4.8%.

Stronger-than-expected Chinese retail sales data and a drop in unemployment rate are also expected to lift sentiment in European markets.

At 2.00 am ET, the Office for National Statistics releases UK labor market statistics. The jobless rate is forecast to rise to 4.1% in July from 3.9% in June.

Around the same time, data on Norway's foreign trade is due.

At 2.45 am ET, France's statistical office Insee is set to publish final consumer prices for August. According to preliminary estimate, inflation rose to 0.2% from 0.8% in July.

At 3.30 am ET, Statistics Sweden releases unemployment data for August. Economists forecast the jobless rate to rise to 9.8% from 8.9% in July.

At 4.00 am ET, Italy's Istat will release final consumer prices for August. Finally, at 5.00 am ET, Germany's ZEW economic confidence survey data is due. The economic sentiment index is seen falling to 69.8 in September from 71.5 in August.

European markets failed to hold early gains and ended mixed on Monday. Renewed optimism about coronavirus vaccine following AstraZeneca resuming final-stage clinical trial of its coronavirus vaccine after getting the nod from regulators lifted sentiment. However, worries about rising possibility of a no-deal Brexit, and uncertainty about the pace of economic recovery rendered the mood cautious as the session progressed.

The pan European Stoxx 600 advanced 0.15%. The U.K.'s FTSE 100 edged down 0.10%, Germany's DAX slid 0.07% and France's CAC 40 moved up 0.35%, while Switzerland's SMI ended 0.17% up.

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