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European Stocks Seen Sharply Lower; Eurozone Q3 GDP Due

·3 min read

By Peter Nurse

Investing.com - European stock markets are seen opening sharply lower Friday, ending the week with confidence at a low ebb given fears of more economic damage from fresh Covid-inspired lockdowns and with next week’s U.S. presidential election causing uncertainty.

At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 1.6% lower, CAC 40 futures in France dropped 1.5% and the FTSE 100 futures contract in the U.K. fell 1.2%.

This week's announcement of fresh restrictions on social gatherings and economic activity to combat a second wave of Covid-19 cases in Europe have prompted concerns the region could suffer a double-dip recession.

The European Central Bank, at its meeting on Thursday, noted that the economic outlook had darkened notably, with President Christine Lagarde sending out strong signals that further easing was on its way in December.

“Lagarde surprised with more dovishness and determination than expected, posing the only question if the ECB agrees on the need to act in December, why didn't they act already today? Here is the answer: Had the ECB meeting taken place not one day but one week after the lockdown announcements in France and Germany, the outcome of the meeting would probably have been different,” said Carsten Brzeski, an analyst at ING, in a research note.

The main economic release Friday will be the third quarter GDP number for the euro zone later in the session. This is expected to show a rebound from the previous quarter’s drop of 11.8%, and follows the French economy showing record growth of 18.2% in the previous quarter.

Over in the U.S., Democrat Joe Biden maintains a comfortable lead over incumbent president Donald Trump in the polls, but a great deal of uncertainty over the outcome remains, including whether the result will be accepted without legal challenge.

In corporate news, Spanish bank BBVA's (MC:BBVA) third-quarter net profit fell by much less than had been expected, continuing the recent trend of European banks outperforming, admittedly weak, expectations.

The tech sector will also also be in the spotlight after corporate behemoths Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) all released results after the U.S. close Thursday. While all of them beat consensus forecasts, the lack of optimistic guidance and sharp rises in input costs at the likes of Facebook and Amazon made for a gloomy after-hours trading session.

Oil prices continued to head south Friday, on track for a second consecutive monthly fall as traders worried about the effect the surge of coronavirus cases, and subsequent lockdowns, is having on global demand.

The focus is turning onto the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, with pressure mounting for these producers to maintain the current supply cuts when they next meet at the end of November.

U.S. crude futures traded 1% lower at $35.81 a barrel, while the international benchmark Brent contract fell 1.1% to $37.84, falling to levels last seen in May.

Elsewhere, gold futures rose 0.1% to $1,868.85/oz, while EUR/USD traded flat at 1.1673.

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