Stocks Set For Mixed Open As EU Leaders Near Agreement On Recovery Fund

European bourses are looking towards a mixed start as traders struggle for direction at the start of the new week as investors await developments from the EU leaders’ summit and as UK – Chinese relations deteriorate.

The EU leaders meeting is entering its third day with no deal on the EU Recovery Fund agreed. The Fund aims to help those countries most affected by the coronavirus crisis, Italy and Spain. However, the Frugal Four – the Netherlands, Sweden, Denmark and Austria are opposed the deal in its current form. They want the Recovery Fund to be loan heavy with less emphasis on grants. The fact is that pushing heavily indented countries such as Italy further into debt could not only come back to bite Italy but also the eurozone as a whole in a remake of the sovereign debt crisis. The opposing sides are reportedly close to agreeing and the Euro remains elevated on such optimism.

UK – China tensions rise
UK -Chinese relations continue to deteriorate creating a downbeat tone. Dominic Raab has hinted that the UK will withdraw from the extradition treaty with Hong Kong, risking a wider fallout with China. The move comes as Huawei will be banned from the UK’s 5G network and among the possibility of sanctions over human rights violations. The Chinese ambassador to London said that the UK was bowing the US pressure.

US covid stats unnerve investors
Rising coronavirius numbers particularly in the US where numbers have toped 3.7 million, are weighing on risk sentiment. Los Angeles is expected to re-impose lockdown whilst cases in Florida have been described as out of control. As new daily cases remain above 70,000 fears are growing that the frugal economic recovery will be undermined. Evidence of the impact of rising covid numbers was reflected in US consumer confidence numbers on Friday which unexpectedly dropped sharply lower in July.
With little on the economic calendar to keep investors entertained today, stimulus talk on both sides of the Atlantic and potentially vaccine news, as Oxford University and AstraZeneca are due to update on the Phase 3 trials, could drive sentiment and the market.

M&S to cut jobs
In corporate news Marks and Spencer is set to announce hundreds of job losses over the coming week. The high street retailer was already struggling prior to coronavirus lockdown as it failed to turn around its flagging clothing department. Lockdown will have accelerated the downwards slippery slope. The tie up with Ocado to boost food sales surely can’t come soon enough, this could at least go some way to offsetting poor clothing business performance.

FTSE Chart

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.