Stocks – Europe to Edge Lower as Virus Spreads; Credit Suisse CEO Quits

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By Peter Nurse – European stock markets are set to edge lower at the open Friday, pausing for breath after recent gains amid caution in Asia over the growth of the coronavirus outbreak and the associated economic damage.

At 02:10 ET (0710 GMT), the contract traded 26 points, or 0.2% lower. France’s were down 2 points, or 0.1%, while the contract in the U.K. fell 15 points, or 0.2%. Futures on the pan-eurozone , fell 2 points, or 0.1%.

Earlier Friday, the death toll from the coronavirus in China reached 636, with those affected topping 31,000, prompting the World Health Organization to warn that it was “too early” to declare a peak in the spread of the new disease.

There were also concrete signs of the disruption to the region’s economies. China’s trade balance fell to a surplus of $39.16 billion in January, from $46.79 billion the previous months, with imports falling 1.5% year on year. Additionally, Singapore’s biggest bank DBS on Friday downgraded its forecast for the city-state’s 2020 growth rate to 0.9% from 1.4% previously, while Australia’s central bank said the virus could shave 0.2 percentage points off the country’s economic growth in the current quarter.

Asian stocks slipped back as a result, with the index in China closing down 1.2%, Japan’s down 2.3% and the in Hong Kong off 2.5%. The index in Australia also dropped 0.4%, while in Singapore the fell 1.3%.

By contrast, U.S. stocks gained for a fourth straight session overnight and Wall Street’s main indexes hit record highs, while earlier in Europe the broad-based index hit an intraday record high. These markets have recovered their poise and posted strong gains of late, underpinned by China’s sweeping efforts to contain the spread of the virus.

Turning back to Europe, in corporate news, eyes will be on Credit Suisse (SIX:) Friday after the Swiss banking giant announced it had accepted Chief Executive Tidjane Thiam’s resignation following a spying scandal. He will be replaced by Thomas Gottstein, the head of the bank’s Swiss business.

German industrial production slumped 3.5% in December, its biggest drop in more than a decade, highlighting the weakness of the manufacturing sector that is dragging on overall growth in Europe’s largest economy. Eyes will now turn to the French and Italian equivalent releases later in the session of confirmation of an European trend.

That said, the key data release Friday will be the U.S. Labor Department’s closely watched at 08:30 AM ET (1330 GMT), which is expected to show nonfarm payrolls increased by 160,000 jobs in January.

The risk is for a surprise to the upside, as this estimate predates ADP’s release on Wednesday, which showed private payrolls increased by 291,000 jobs in January, the most since May 2015.

Elsewhere, the oil market pushed higher Friday, with market players still expecting some form of response from the OPEC-led coalition regarding further cuts in production.

AT 02:10 AM ET (0710 GMT), futures traded 0.4% higher at $51.16 and the international benchmark contract rose 0.5% to $55.19.

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