© Reuters
By Peter Nurse
Investing.com – European stock markets are expected to open higher Tuesday, with the abrupt reversal in the U.K. government’s fiscal thinking helping boost sentiment after weeks of turmoil.
At 02:00 ET (06:00 GMT), the contract in Germany traded 1% higher, in France climbed 1% and the contract in the U.K. rose 0.7%.
New British finance minister on Monday scrapped almost all of Prime Minister Liz Truss’s previously-announced tax and spending measures later Monday, reducing concerns about the size of the increased borrowing needed to fund the plans.
The dramatic U-turn might lead to the not hiking interest rates in November by as much as previously anticipated, with Morgan Stanley now looking for an increase of 75 basis points versus its previous estimate of 100 basis points.
The BoE is also likely to delay the sale of billions of pounds of government bonds to encourage greater stability in gilt markets, the Financial Times reported on Tuesday.
Still, despite this positive tone, a lot will still be needed to be done to fix the U.K.’s public finances, and this comes at a time the country, like the Eurozone, is already on course for a recession.
The main economic data release Tuesday will be the for October, which is expected to show investor sentiment falling further as concerns over the country’s energy supply increasingly weigh on the outlook for Europe’s largest economy.
In corporate news, Roche’s (SIX:) quarterly declined 6% as a slump in COVID-19 treatments and diagnostic testing weighed heavily on the Swiss drugmaker’s results.
Credit Suisse (SIX:) is also likely to be in the spotlight after Reuters reported that the Swiss banking giant has approached at least one Middle Eastern sovereign wealth fund for a capital injection.
Oil prices climbed Tuesday, helped by a weaker , but this positive tone could be short-lived as Reuters reported late Monday that the Biden administration plans to sell oil from the Strategic Petroleum Reserve before next month’s congressional elections.
An announcement, designed to reduce crude prices, is likely this week, and would market the remaining 14 million barrels from Biden’s previously announced, and largest ever, release from the reserve of 180 million barrels that started in May.
The releases its weekly estimate of U.S. crude stocks later in the session, and this will be of interest after last week’s massive 7 million barrel build.
By 02:00 ET, futures traded 0.7% higher at $85.15 a barrel, while the contract rose 0.7% to $92.29.
Additionally, fell 0.2% to $1,660.45/oz, while traded 0.1% higher at 0.9849.
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