1. European markets fall as virus spreads
European stocks tumbled as France and the U.K. both tightened measures to stop the spread of the coronavirus. France’s government imposed a curfew on major cities late on Wednesday, while Londoners will be banned from mixing with people from other households as of the weekend. The measures come amid a growing sense that the continent is behind the curve in controlling the virus’ spread. German Angela Merkel reportedly said after a meeting with local politicians on Wednesday that such measures as they had approved “aren’t hard enough to prevent a disaster.” By 6:30 AM ET (1030 GMT), the euro was down 0.2%, just off a two-week low, while the benchmark Stoxx 600 index was down 2.3%. The yield on the German 10-Year bond, the region’s risk-free benchmark, plummeted to its lowest since March, at -0.62%.
2 Jobless claims seen still stuck above 800k
The reaction in Europe also partly reflected disappointment at U.S. Treasury Secretary Steven Mnuchin’s comments late on Wednesday that all but ruled out any agreement on a stimulus package before the election next month. Fears for the state of the U.S. economy may be revived by the publication at 8:30 AM ET of this week’s initial jobless claims, which are expected to stay stuck above 825,000, an insignificant decline from last week. Continuing claims are expected to have fallen more sharply, as people lose eligibility for benefits or leave the workforce. The Philadelphia Fed’s monthly business survey will be released at the same time. Overnight, there were signs of weakness in the Chinese economy too, with producer price inflation falling to -2.1% on the year in a clear sign that companies are struggling to regain any sort of pricing power in the wake of the pandemic.
3. Stocks set to open lower as earnings dominate
U.S. stocks are pointing to a lower open, extending Wednesday’s losses that were triggered by the apparent collapse of stimulus talks and by a much wider-than-expected loss at United Airlines in the third quarter. United shares were down 1.5% in premarket trading.
By 6:20 AM ET, Dow futures were down 272 points, or 1.0%, while S&P 500 Futures were down 1.1% and NASDAQ Futures were down 1.6%. All three are still clearly in positive territory for the month but have now retraced around half their gains since the end of September.
Stocks likely to be in focus later include Morgan Stanley (NYSE:MS), Charles Schwab (NYSE:SCHW) and Kimberly-Clark (NYSE:KMB), all of which are due to report quarterly earnings, along with Taiwan Semiconductor and Roche. French luxury giant LVMH will also report Q3 revenue after the bell.
4. Biden keeps poll lead as NY Post stirs fresh controversy
Markets were unsettled on Wednesday also by the publication of a story by the New York Post that appeared to confirm contact between Democratic Presidential nominee Joe Biden and representatives of a Ukrainian company where his son Hunter was on the board.
The story strengthens conservative suspicions of influence-peddling by Biden Sr. while he was still vice president under Barack Obama, albeit without proving them.
However, of more potential significance is the reaction of social media networks Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR), which suppressed the story on their networks, citing the suspicious circumstances in which the material was obtained. Their reaction provoked fresh cries of anti-conservative bias in Silicon Valley at a crucial stage of the election campaign. A poll for the Wall Street Journal and NBC indicated that Biden still leads President Trump by 11 percentage points nationally, with less than a month until polling day. A report by Fortune suggested the race is considerably tighter.
5. Oil falls; OPEC technical experts meet
Crude oil prices slumped on the general wave of risk aversion in world markets overnight, which revived the usual fears about global demand weakness. By 6:25, U.S. crude futures were down 2.6% at $39.98 a barrel, while Brent futures were down 2.4% at $42.29 a barrel, effectively reversing all the gains they made on the back of a bigger-than-expected drop in U.S. crude stockpiles last week. The government’s inventory data, due at 10:30 AM, will be looked to for corroboration of the American Petroleum Institute’s numbers. Further afield, technical experts from the ‘OPEC+’ bloc of oil exporters will meet in Vienna to assess the state of their production restraint pact. Ministers are due to review the pact at a meeting on Tuesday, against a backdrop of speculation that they may push pack a scheduled increase in production that is due to kick in at the start of next year.