European stocks are trading mixed on Tuesday, after posting their worst one day performance in nearly four months in the previous session on concerns about the potential impact on businesses from the coronavirus.
Early in the session, the travel and leisure subsector traded flat to slightly better, posting a modest 0.2% gain, after tumbling to its lowest level in nearly seven weeks in the previous session on travel restrictions.
The early price action suggests that investors sold stocks on Monday for defensive reasons, but today, bargain hunters reemerged on the notion that yesterday’s sell-off was overextended.
Investors Starting to React to the Bigger Picture
The steady performance in the European stock markets and the extremely weak markets in Asia indicates that investors may be starting to realize that the Asian economy will feel the biggest impact from exposure to the coronavirus.
“What is becoming a little clearer is that the Chinese economy will take a hit for a time, travel and tourism is being impacted in China, in Asia and elsewhere, including in Australia where the Chinese inbound tourism market is the largest market in exports of personal tourism and education,” David de Garis, a director and senior economist at National Australia Bank, wrote in a Tuesday morning note.
Brexit Back in Focus
In other news, Brexit is back in focus with the U.K. set to leave the European Union on Friday, beginning a transitional period in which both sides work toward the ambitious target of agreeing a new free trade agreement this year.
EU chief negotiator Michel Barnier warned the U.K. on Monday that the bloc will “never, never, never” compromise on the single market, accusing Britain of underestimating the cost of leaving.
Early Look at US Markets
U.S. stock index futures were higher on Tuesday morning after the Dow posted its worst trading day in about three months.
In other market news, 3M, Pfizer and Xerox are due to report before the bell. Apple, Alaska Air, Starbucks and eBay are due to update investors after the bell.
On the data front, durable goods are set to be out at 13:30 GMT. Consumer confidence figures alongside the Richmond and Dallas Fed surveys are expected at 15:00 GMT.
This article was originally posted on FX Empire
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