European stock markets are set to edge lower at the open Thursday, consolidating after recent strong gains ahead of the latest meeting of the European Central Bank.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.3% lower. France’s CAC 40 futures were down 0.2%, while the FTSE 100 futures contract in the U.K. fell 0.2%.
Stock markets have been on a roll of late, fueled by investor optimism over the global economic recovery from the coronavirus outbreak amid record stimulus measures from governments and central banks.
In Europe, the DAX index closed at a new three-month high in Frankfurt on Wednesday, and the CAC 40 at a one month peak in Paris.
Late Wednesday the German government announced its second stimulus package since the start of the pandemic. The new package includes a temporary cut in VAT and one-off handouts for parents of children but does not include direct aid for the car industry, except in the form of grants for smaller electric vehicles and charging stations.
With this in mind, attention will turn to the European Central Bank meeting later Thursday, with the central bank widely expected to ramp up its stimulative bond purchases to support the region’s battered economies.
“We believe the ECB is ready to ease monetary policy again,” said analysts at Nordea, in a research note to clients, “this time by raising the Pandemic Emergency Purchase Programme by 500 bn [euros] to 1250 bn [euros] and possibly even signalling that the purchases will not end by December 2020.”
The ECB will also publish its new economic forecasts. Data this week suggest the economy may already have bottomed but risks to the recovery remain in the form of a second wave of Covid-19 infections and Sino-U.S. tension that may lead to another damaging trade war.
In corporate news, Roche (SIX:RO) will be in the spotlight after the Swiss drugmaker announced Thursday that its Covid-19 diagnostic test had been authorized for use in the United States.
French spirits company Remy Cointreau (PA:RCOP) predicted its current operating profit would fall by 45-50% in the first half of its 2020/21 fiscal year due to the coronavirus crisis, although it expected a strong recovery in the second half.
HSBC (LON:HSBA) and Standard Chartered (LON:STAN) could also be in focus Thursday, as the two Asia-focused U.K. banks backed China’s imposition of a national security law on Hong Kong, placing them on collision course with the U.K. government.
Oil prices slipped lower Thursday on concerns that major producers will be unable to agree to extend the record level of output cuts that have supported the recent gains.
Also weighing on prices was the release of the Energy Information Administration data late Wednesday, which showed gasoline and distillate stocks rising by much more than expected.
At 2:05 AM ET, U.S. crude futures traded 1.8% lower at $36.63 a barrel. The international benchmark Brent contract fell 1.2% to $39.31.
Elsewhere, gold futures fell 0.2% to $1,7401.35/oz, while EUR/USD traded at 1.1222, down 0.1%.