European stock markets are seen edging higher at the open Tuesday, stabilizing after Monday’s rout on concerns that the resurgence of Covid cases will derail the global economic recovery.
Stock indices in Europe closed sharply lower Monday, with the DAX down 2.6%, the CAC 40 down 2.5% and the FTSE 100 2.3% lower, amid fears the latest surge of Covid-19 cases, led by the highly contagious delta variant, will prompt governments to resume tight lockdowns and curb economic activity.
The news was no better on Wall Street, with the blue chip Dow Jones Industrial Average dropping more than 700 points, while Asia Pacific stocks were mostly down on Tuesday, continuing their losses from a day earlier.
These markets had rallied strongly in the first half of the year as investors bet that the rollout of Covid-19 vaccination programs would help economies to recover strongly as mobility restrictions were lifted. However, the increase in new cases, firstly in Asia but increasingly in Europe and the U.S., has changed that narrative.
Helping the tone Tuesday was the news that UBS (NYSE:UBS) reported a 63% jump in quarterly net profit to $2 billion, up from the $1.23 billion reported for the same period last year, helped by what the Swiss banking giant described as “favorable” market conditions.
LVMH (PA:LVMH) will also be in the spotlight Tuesday after the French luxury group said it had agreed to buy a 60% stake in the luxury streetwear brand Off-White, while earnings updates come from Volvo (ST:VOLVb), Ubisoft (PA:UBIP) and easyJet (LON:EZJ).
On the economic data front, the Eurozone current account data for May is scheduled later Tuesday, but most eyes will be on German producer prices for June given the recent concerns about the rise in inflation globally.
Elsewhere, oil prices edged higher Tuesday, steadying after the previous session’s sharp selloff on the back of worries that increased Covid cases will hit the short-term demand for energy just as a group of top producers agreed to increase supply.
By 2:05 AM ET, U.S. crude futures traded 0.9% higher at $66.95 a barrel, after dropping more than 7% Monday, their worst session since September, while the Brent contract rose 0.7% to $69.07, after falling 6.8% to an eight-week low.