European stocks may open lower on Wednesday on concerns that the end of U.S. stimulus talks could derail economic recovery.
Federal Reserve Chairman Jerome Powell on Tuesday warned of ongoing risks to the economy if authorities did too little to support the economic rebound.
“Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” he said.
Asian markets remain broadly higher as U.S. President Donald Trump’s tweets seemed to promise backing for individual pieces of fiscal stimulus.
Investors are also pinning hopes that the Fed will consider more accommodation to keep the economic recovery on track.
The dollar held gains against most currencies after Trump’s latest call for partial stimulus, while gold edged up, after having hit a one-week low in early trade. Oil prices fell about 2 percent after a larger-than-expected buildup in U.S. crude stocks.
Industrial production data from Germany and house price figures from the U.K. are due later in the session, headlining a light day for the European economic news.
Across the Atlantic, the FOMC September meeting minutes will be released later today.
U.S. stocks fell sharply overnight after President Trump tweeted that he would end negotiations on a new fiscal stimulus package until after the Nov.3 presidential election, adding that House Speaker Nancy Pelosi was “not negotiating in good faith.”
Markets also fell in response to Fed Chair Powell’s comments that the U.S. economic recovery remained far from complete and the economy needs more fiscal support.
The Dow Jones Industrial Average dropped 1.3 percent, the tech-heavy Nasdaq Composite shed 1.6 percent and the S&P 500 declined 1.4 percent.
European stocks rose broadly on Tuesday as Trump’s return to the White House from hospital coupled with Joe Biden’s increasing lead in weekend polls in the U.S. presidential race helped reduce uncertainties surrounding the 2020 presidential election.
The pan European Stoxx 600 ended little changed with a positive bias. The German DAX rose 0.6 percent, France’s CAC 40 index gained half a percent and the U.K.’s FTSE 100 edged up 0.1 percent.
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