By Peter Nurse
Investing.com – European stock markets are set to open lower Tuesday, following losses in Asia overnight amid worries about the extent of a new virus in China.
At 02:00 ET (0700 GMT), the contract traded 110 points, or 0.8%, lower. France’s were down 45 points, or 0.8%, while the contract in the U.K. also dropped 46 points, or 0.6%. Futures on the pan-eurozone , fell 24 points, or 0.6%.
With Wall Street closed Monday, European traders looked to Asia for early guidance Tuesday. The news there was not positive as the spread of a pneumonia-like virus in China prompted fears of a repeat of the 2002 SARS pandemic. On that occasion more than 8,000 people across 37 countries were affected, with at least 774 deaths.
The outbreak of the disease, which has spread from the central city of Wuhan, is still in its early stages, but has resulted in four confirmed deaths so far.
Hong Kong, which suffered badly during the SARS outbreak and also Tuesday had its credit rating downgraded by Moody’s, saw its index fall 2.7%. Japan’s lost 1% and Shanghai blue chips 1.5%. The news had on Monday also affected European luxury goods makers, for whom Hong Kong contributes a large proportion of sales.
Still in Asia, the Bank of Japan left its official interest rates unchanged Tuesday and painted a brighter picture of the economic outlook. This had been widely expected following Prime Minister Shinzo Abe’s $120 billion economic package unveiled last month, and comes ahead of meetings by the European Central Bank later this week and the Federal Reserve next week.
Attention in Europe will focus on the World Economic Forum in Davos, Switzerland, where U.S. President Donald Trump is due to deliver a speech later Tuesday. Trade and tariffs could be on the agenda following a report that the U.S. and France have struck a truce over France’s proposed digital tax, agreeing to hold off from a potential tariff war until the end of the year.
In corporate news, airlines are likely to be in focus given the worries over the virus in China and the impact this could have on travel. More specifically, Air France KLM SA (PA:) will be in the spotlight following a report that it seeks to invest in the ailing Malaysia Airlines.
The Malaysian government has been seeking a strategic partner for its national airline, which has struggled to recover from two tragedies – the mysterious disappearance of flight MH370 and the shooting down of flight MH17 over eastern Ukraine.
UBS Group AG (NYSE:) started the European bank earnings season in disappointing fashion. The Swiss giant missed its full-year profitability and cost targets and cut its mid-term goals.
Economic releases are thin on the ground Tuesday, with the main highlights being U.K. employment numbers at 4:30 AM ET (09:30 GMT) and the German release at 5:00 AM ET (10:00 GMT),
Elsewhere, the price of oil has retreated after Monday’s gains on supply concerns amid intensifying tensions in the Middle East.
At 2:05 AM ET (07:05 GMT), futures traded 0.7% lower at $58.15 and the international benchmark contract fell 1% to $64.58. for February delivery on New York’s COMEX were up 0.4% at $1,565.70.