European Shares Seen Lower Amid US-China Tensions

Business

European stocks are seen opening lower on Tuesday after the Trump Administration rejected China’s expansive claims in the South China Sea, a move that Beijing criticized as inciting tensions in the region.

Meanwhile, Chinese officials have threatened consequences if the U.K. government confirms ban on Huawei’s connections to Britain’s 5G network amid growing unease over security risks.

Growth worries persist as Covid-19 cases continue to spike in the U.S. and some other parts of the world.

Hong Kong reimposed social distancing measures to combat a sudden spike in coronavirus infections and Singapore’s economy plunged into a recession last quarter, fueling worries about the economic recovery.

Singapore’s economy contracted by a record 41.2 percent from the previous three months and 12.6 percent year-on-year in the April-June quarter. It was the worst quarterly figure for gross domestic product ever recorded in the country.

Tedros Adhanom Ghebreyesus, the director of the World Health Organization, warned that the pandemic is worsening globally and that “there will be no return to the old normal for the foreseeable future.”

His remarks came as Florida shattered the national record for a state’s largest single-day increase in new confirmed cases.

Apple has told its employees in the United States that it does not anticipate a full return to physical offices before the end of the year.

Asian markets fell on growth worries, with Hong Kong stocks faring worst. Investors ignored data showing that China’s exports and imports rose in yuan terms in June. The country reports gross domestic product data on Thursday.

Monthly GDP estimate as well as foreign trade and industrial and services output figures are due from the U.K., headlining a busy day for the European economic news.

Across the Atlantic, earnings news may drive trading, with Citigroup, Delta Air Lines, JPMorgan Chase and Wells Fargo among the companies due to report their quarterly results before the start of trading.

Gold eased on a firmer dollar, while oil prices dropped for a second day on expectations that OPEC+ will start winding down production cuts next month.

U.S. stocks ended a choppy session mostly lower overnight after California rolled back its reopening plans and investors grappled with rising tensions between Washington and Beijing.

The tech-heavy Nasdaq Composite reached a fresh record intraday high before reversing direction to end down as much as 2.1 percent.

The S&P 500 declined 0.9 percent while the Dow Jones Industrial Average finished little changed with a positive bias.

European markets advanced on Monday as investors reacted positively to more upbeat news regarding potential coronavirus vaccines.

The pan European Stoxx 600 gained 1 percent. The German DAX and the U.K.’s FTSE 100 both climbed around 1.3 percent, while France’s CAC 40 index rallied 1.7 percent.

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