Stocks - Europe Seen Higher But Virus Concerns Will Limit Gains

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Stocks - Europe Seen Higher But Virus Concerns Will Limit Gains
Credit: © Reuters.

By Peter Nurse

Investing.com - European stock markets are set to open higher Monday, emerging from Friday’s sea of red, but sentiment remains weak as Chinese markets reopen with hefty losses and the coronavirus continues to claim victims.

At 02:05 ET (0705 GMT), the DAX futures contract traded 54 points, or 0.4% higher. France's CAC 40 futures were up 36 points, or 0.6%, while the FTSE 100 futures contract in the U.K. gained 44 points, or 0.6%. Futures on the pan-eurozone Euro Stoxx 50 , rose 26 points, or 0.7%.

All the major European indexes lost well over 1% Friday amid concerns over the economic repercussions of the outbreak, while on Wall Street there were drops of more than 1.5%, sealing the worst week in six months.

This was the backdrop into which financial markets on the Chinese mainland reopened on Monday. And the blue-chip Shanghai index promptly fell around 8% to a one-year low, wiping almost $370 billion off the market value. The Chinese government had extended the Lunar New Year holiday after the deadly virus outbreak to try and curb its spread.

That was despite a liquidity injection from the central bank and a ban on short selling handed down by the country's securities regulator.

In a bid to cushion the impact on China's economy, the People's Bank of China cut reverse repo rates by 10 basis points and injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets on Monday. The net injection was far smaller as nearly 1 trillion yuan in loans was due to expire.

The coronavirus death toll continues to climb, reaching 361 with 17,205 confirmed cases, as of early Monday, and at least 24 provinces have told businesses not to resume work before Feb. 10 at the earliest.

The earnings season continues in Europe, although Monday’s cupboard is a little bare.

Ryanair (LON: RYA ) will be in focus Monday after stating that delays in the delivery of Boeing's 737 MAX plane meant it would have to put back its target of flying 200 million passengers in the year to 2025 or 2026, from March 2024 as previously planned.

Elsewhere, Swiss wealth manager Julius Baer (SIX: BAER ) posted a 5% drop in adjusted net profit for 2019, while Siemens Healthineers (DE: SHLG ) operating income slipped 11% in the first quarter of its fiscal year.

Additionally, there was some M&A news as payments company Worldline (PA: WLN ) said it had agreed to buy French peer Ingenico (PA: INGC ), in a deal which the companies said would create the fourth-biggest payments company in the world.

On Wall Street, Google parent Alphabet (NASDAQ: GOOGL ) will report on Monday, This will be the company’s first time facing investors after it announced that Sundar Pichai would take over as CEO, after previously being in charge of Google, the company's main operating business.

Looking at the economic calendar, the focus will be on European manufacturing PMI data, and in particular the confidence of businesses in the important German market. This is followed in the U.S. with the closely watched Institute for Supply Management’s manufacturing release.

At 02:05 AM ET (0705 GMT), U.S. crude futures traded 0.1% lower at $51.49 and the international benchmark Brent contract fell 0.6% to $56.26. Gold futures for February delivery on New York’s COMEX were 0.3% lower at $1,583.05.

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