20th Oct 2020 07:03
(Alliance News) - European equities are called lower on Tuesday as investors watch time run out for the US government to agree a pre-election stimulus package.
Over the weekend, House Speaker Nancy Pelosi set a Tuesday deadline for a deal, while US President Donald Trump urged his Republican Party to offer more than the USD1.8 trillion they have put forward, adding that he would be willing to go higher than the Democrats' USD2.2 trillion proposal.
IG futures indicate the FTSE 100 index is to open 20.0 points lower at 5,864.8. The blue chip index closed down 34.93 points, or 0.6%, at 5,884.65 on Monday.
The pound was quoted at USD1.2947 Tuesday morning in London, down from USD1.3000 at the London equities close on Monday.
Frankfurt's DAX 30 index is called down 0.6% and the CAC 40 in Paris is seen opening 0.4% lower.
Democrats and Republicans in Washington are in the final two weeks of negotiations before the November 3 presidential election on new spending measures to boost the US economy, amid the grievous damage caused by the coronavirus pandemic.
Pelosi and Treasury Secretary Steven Mnuchin spoke Saturday night, though a number of key differences remain.
CMC Markets analyst Michael Hewson said: "With rising coronavirus cases across Europe prompting fresh measures to contain the spread, there is rising concern that a lack of will to pass fresh stimulus measures was likely to temper investor willingness to push stocks higher in the short term.
"This probably helps explain why US stocks, after initially opening higher, started to roll over after markets in Europe had closed, as it became apparent that for all the warm words from Democrat House Speaker Nancy Pelosi that she wanted to see a fiscal deal in place before November 3, the likelihood of a deal taking place appears no more likely now than it was a week ago, with the window for it happening appearing to be closing fast, as tonight's Pelosi imposed Tuesday deadline for getting a deal agreed comes into view."
On Wall Street, the Dow Jones Industrial Average ended down 1.4% on Monday. The S&P 500 lost 1.6%, while the Nasdaq Composite shed 1.7%.
Hewson also noted there is mounting concern in the US over a rise in Covid-19 cases, with infections jumping more than 5% a day in 38 US states.
In early company news, miner BHP said its first-quarter production performance was "strong", albeit mixed, with guidance mostly left unchanged.
Petroleum output in the three months ended September fell 9%, energy coal dropped 17% and copper slipped 4%.
There was an 8% rise in the production of iron ore, metallurgical coal and nickel, however.
All guidance was held, except for the energy coal segment where its annual forecast is now under review.
"BHP has started the new financial year with a strong first quarter of safety and production performance. Group production rose 2% from a year ago, Chief Executive Officer Mike Henry said.
The company has shelved expansion plans at its Olympic Dam copper and silver asset.
"Following more than 400 kilometres of underground drilling associated with the Brownfield expansion project studies, we have improved knowledge of the ore body's variability. This has provided challenges for the economics of the BFX project, and we have decided the optimal way forward for now is through targeted debottlenecking investments, plant upgrades and modernisation of our infrastructure," BHP said.
The stock closed down 1.6% in Sydney on Tuesday.
The economic events calendar on Tuesday has Germany producer prices at 0700 BST and eurozone current account figures at 0900 BST.
The UK corporate calendar has annual results from housebuilder Bellway and from IT infrastructure products provider Softcat. Household goods firm Reckitt Benckiser reports third-quarter earnings.
In China, the Shanghai Composite was up 0.1% while Hong Kong's Hang Seng Index was down 0.2%. Tokyo's Nikkei 225 was 0.6% lower in late trade.
The world's second-largest chipmaker, South Korea's SK Hynix, is to buy Intel's flash memory chip operation in a deal worth USD9 billion, it said Tuesday, as it seeks to bolster its position against Samsung.
In a regulatory filing, the chipmaker said it will acquire Intel's "entire NAND business division excluding the Optane division" for KRW10.3 trillion.
The deal includes Intel's factory in Dalian, China, it added.
The euro stood at USD1.1778 early Tuesday, down from USD1.1785 at the European equities close Monday.
Against the yen, the dollar was trading at JPY105.51, firm from JPY105.45 late Monday.
Brent was changed hands at USD42.46 a barrel on Tuesday morning, down from USD42.92.
An ounce of gold fetched USD1,902.12, down from USD1,908.70.
By Eric Cunha; [email protected];
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