Investing.com – European stock markets are set to open lower Wednesday, with the second half of the year starting with worries about the Covid-19 outbreak still prominent even as data releases offer hope of a global economic recovery.
China’s factory activity expanded in June, with the Caixin/Markit Manufacturing Purchasing Managers’ Index rising Wednesday to 51.2 from 50.7 in May, marking the highest reading since December 2019. That followed a similarly upbeat reading from the Chinese government’s own PMI on Tuesday.
Throw in strong U.S. housing data and a rebound in consumer confidence in Europe, and the recovery from the coronavirus-inspired slump looks well underway. U.S. manufacturing activity data due later Wednesday is also expected to show a recovery from April’s depths, while the nonfarm payrolls report on Thursday is forecast to show the U.S. economy added 3 million jobs in June.
However, the resurgence of the Covid-19 virus around the world, but particularly in the U.S., the world’s economic engine, threatens to derail this nascent recovery.
The U.S. recorded 47,000 infections on Tuesday, its biggest single-day spike since the pandemic began, and this surge has prompted populous states like California, Texas and Florida to restrict economic activity once more.
“Clearly we are not in total control right now,” the country’s top infectious disease expert, Anthony Fauci, told a Senate committee on Tuesday, adding that cases could increase by as much as 100,000 daily if the outbreak is not contained.
Turning back to Europe, German retail sales jumped 13.9% in May, rebounding strongly from April’s 5.3% slump. More indications of the region’s recovery will come in later in the session in the form of manufacturing PMI data and German unemployment numbers.
In corporate news, Ryanair (LON:RYA) could receive a boost Wednesday after Europe’s biggest budget airline said it expects to fly more than 4.5 million passengers in July. This would represent a huge increase from April and May when it flew just 110,000 passengers.
On the flip side, U.K.-based budget airline easyJet (LON:EZJ) said it is considering shutting three of its airport hubs because of the steep drop in travel demand.
Oil prices pushed higher Wednesday, helped by American Petroleum Institute data showing a much larger than expected reduction in U.S. crude stocks last week, which suggests a bump up in demand even with the reemergence of the coronavirus in a number of states.
Official inventory data from the U.S. government’s Energy Information Administration is due out later on Wednesday.