European Stocks Largely Flat; Coronavirus Developments in Focus
The near-term outlook for the European economy darkened somewhat on Tuesday after a report by the newspaper Bild suggested German Chancellor Angela Merkel wanted to extend the current lockdown in Europe's largest economy through the end of March.
"It seems the December trading enthusiasm, driven by the prospect of a global economic recovery, is now being offset by alarming Covid-19 numbers as well as valuation concerns over stocks that went far away from their equilibrium price," said Pierre Veyret, a technical analyst with ActivTrades, in a morning note.
That said, the underlying tone remains positive given low interest rates globally and monetary and fiscal stimulus from central banks and governments alike, as well as the idea that vaccinations are coming.
Later Wednesday, the U.S. House of Representatives is set to vote to impeach President Donald Trump over the recent turmoil in the U.S. Capitol. Vice President Mike Pence resisted pressure on Tuesday to invoke the 25th Amendment to remove Trump. An impeachment trial could proceed even after Trump leaves office on Jan. 20.
Back in Europe, Telefonica (NYSE:TEF) stock rose 7.5% after the Spanish telecom company agreed to sell its mobile phone masts in Europe and Latin America to U.S.-based telecom infrastructure operator American Towers for 7.7 billion euros ($9.41 billion) in cash.
ASOS (LON:ASOS) stock rose 3% after the retailer posted a better-than-expected trading update, while Carrefour (PA:CARR) stock climbed over 6% after it emerged that Canada’s Couche-Tard was in talks to buy the French retailer.
November industrial production figures for the euro zone are also due. The euro-area economy is poised to shrink again at the start of this year as the resurgent pandemic plunges the region into a double-dip recession.
Oil prices continued to climb Wednesday, boosted by industry data showing a hefty draw in U.S. inventories, again suggesting that the U.S. measures to contain the latest surge in the pandemic have had less effect on demand than those in Europe.
Oil stocks in the U.S. dropped by 5.8 million barrels last week, data from the American Petroleum Institute showed late Tuesday. The government agency, the Energy Information Administration, releases its data later Wednesday.