Picture: REUTERS/KAI PFAFFENBACH
Picture: REUTERS/KAI PFAFFENBACH

London — 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 pan-European Stoxx 600 was unchanged in early trading, and markets in Frankfurt, London and Paris were steady to higher.

Markets had little direction as they grappled with “angst about vaccine/antibody delays, angst about rising Covid-19 cases in Europe, stalled US fiscal talks, stalled Brexit trade talks”, said Kit Juckes, macro strategist at Societe Generale.

Wall Street futures were up 0.4%, however, with US banks Goldman Sachs, Wells Fargo and Bank of America scheduled to report results on Wednesday, following above-estimate earnings from JPMorgan and Citigroup in the previous session.

Stock market losses began on Wall Street Tuesday when Johnson & Johnson said it was pausing a Covid-19 vaccine trial after a study participant suffered an unexplained illness. Eli Lilly later said it too had paused the clinical trial of its Covid-19 antibody treatment because of a safety concern, leading the US 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 US House speaker Nancy Pelosi rejected a $1.8-trillion relief proposal from the White House.

“US 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 EU 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, the dollar and yen. EU leaders will hold a summit in Brussels on Thursday and Friday to assess progress.

Eurozone August industrial production data is due on Wednesday.

Oil slipped on concerns that fuel demand would continue to falter on concern that rising coronavirus cases across Europe and the US, the world's biggest oil consumer, would impede economic growth.

Brent and US crude were off about 0.5% at $42.24 and $39.97 a barrel, respectively.

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

Government bonds were also seeing small moves, though German bund yields, which move inversely to prices, dipped to their lowest since May. Gold, another safe haven, picked up 0.26%.

MSCI’s broadest index of Asia-Pacific shares outside Japan 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 closed down 0.7%.

Reuters

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