Shares steady with U.S. bank earnings in sight

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By Carolyn Cohn

LONDON (Reuters) – European shares held steady on Wednesday, underpinned by gains for Wall Street futures, following losses the day before on vaccine trials and a stimulus impasse, while the dollar was also stable.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 13, 2020. REUTERS/Staff

The pan-European STOXX 600 .STOXX was unchanged in early trading, and markets in Frankfurt .GDAXI, London .FTSE and Paris .FCHI were steady to higher.

Markets had little direction as they grappled with “angst about vaccine/antibody delays, angst about rising covid cases in Europe, stalled U.S. fiscal talks, stalled Brexit trade talks”, said Kit Juckes, macro strategist at Societe Generale.

Wall Street futures ESc1 were up 0.4%, however, with U.S. banks Goldman Sachs GS.N, Wells Fargo WFC.N and Bank of America BAC.N scheduled to report results on Wednesday, following above-estimate earnings from JPMorgan JPM.N and Citigroup C.N in the previous session.

Stock market losses began on Wall Street Tuesday when Johnson & Johnson JNJ.N said it was pausing a COVID-19 vaccine trial after a study participant suffered an unexplained illness.

Eli Lilly and Co LLY.N later said it too had paused the clinical trial of its COVID-19 antibody treatment because of a safety concern, leading the U.S. equity market to deepen losses.

J&J shares lost 2.3%, and Eli Lilly closed down nearly 3%.

Hopes for the passage of a new coronavirus relief package also faded as U.S. House Speaker Nancy Pelosi rejected a $1.8 trillion relief proposal from the White House.

“U.S. stimulus talks are still going nowhere, dimming the prospect of a new round of support this side of the election,” said Sydney-based NAB strategist Rodrigo Catril.

In addition, investors are watching tensions between the European Union and Britain after the EU demanded “substantive” movement on Tuesday on fisheries, dispute settlement and guarantees of fair competition in their talks on a post-Brexit trade deal.

Sterling declined the most among major currencies, down 0.4% against the euro EURGBP=, the dollar GBP=D3 and yen GBPJPY=. EU leaders will hold a summit in Brussels on Thursday and Friday to assess progress.

Euro zone August industrial production data is due on Wednesday.

(Graphic: World stocks fighting off the virus – )

BREATHER

Oil slipped on concerns that fuel demand will continue to falter on concern rising coronavirus cases across Europe and in the United States, the world’s biggest oil consumer, will impede economic growth. [O/R]

Brent LCOc1 and U.S. crude CLc1 were off around 0.5% at $42.24 and $39.97 a barrel, respectively.

The U.S. dollar was steady after its best day in three weeks on Tuesday, when its index =USD against a basket of six major currencies rose 0.5%. The index was last 0.1% higher at 93.62. The euro EUR= was barely changed at $1.1734.

Government bonds were also seeing small moves DE10YT=RRUS10YT=RR, though German bund yields, which move inversely to prices, dipped to their lowest since May [EUR/GVD]. Gold, another safe haven, picked up 0.26% XAU=.

MSCI’s broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS had tracked Wall Street’s losses overnight to end a seven-day rally.

The index was last down 0.25%, having toppled from a two-and-a-half-year high of 588.76 touched on Tuesday. Chinese shares .CSI300 closed down 0.7%.

Reporting by Carolyn Cohn, Swati Pandey and Marc Jones, editing by Larry King

Our Standards: The Thomson Reuters Trust Principles.

Reuters

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