European Stocks Edge Lower; ECB Still Sees Sharp Output Drop

European stock markets edged lower Wednesday, amid worries that the recent surge in coronavirus cases throughout the region will halt the nascent economic recovery even given the Covid-19 vaccine breakthroughs.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 0.1% lower, the CAC 40 in France fell 0.1%, while the U.K.’s FTSE index dropped 0.3%.

Sentiment has weakened as the week has progressed as investors returned to the basic concept that large sections of many economies throughout Europe remain closed as governments react to a second wave of the Covid-19 pandemic.

In corporate news, RSA Insurance (OTC:RSNAY) stock rose 3.9% after receiving a cash offer worth 7.2 billion pounds ($9.55 billion) from Canadian peer Intact Financial and Danish insurer Tryg.

Maersk (CSE:MAERSKb) stock fell 0.9% despite the shipping group launching a $1.6 billion share buyback after reporting third-quarter sales and operating profit in line with previous guidance.

Richemont (SIX:CFR) stock fell 1.6% after the Swiss luxury group said it plans to issue warrants as part of a shareholder loyalty scheme, following a cut to its dividend.

Equity markets had been given a boost Monday when Moderna (NASDAQ:MRNA) said its experimental Covid-19 vaccine was 94.5% effective in preventing infection, adding to Pfizer’s promising trial data last week.

However, an effective coronavirus vaccine will not fundamentally change European Central Bank economic projections, as a medical solution was already factored into forecasts, ECB President Christine Lagarde told a Bloomberg event on Tuesday.

Real GDP is projected to fall by 8.0% in 2020, according to the latest ECB staff projections, before rebounding by 5.0% in 2021 and by 3.2% in 2022.

While the deployment of vaccines could occur more quickly than earlier thought, the economy was also taking a bigger hit from the second wave of the pandemic than expected, Lagarde added.

Oil prices edged higher Wednesday despite a jump in U.S. inventories that raised fears of a fresh glut. The industry body, the American Petroleum Institute, said late Tuesday that U.S. crude stockpiles rose by 4.2 million barrels last week, well above expectations for a build of 1.7 million barrels. Official supply data are due later in the session.

OPEC+, a group which includes members of the Organization of the Petroleum Exporting Countries as well as Russia, currently plans to boost output by 2 million barrels per day in January, ahead of a meeting starting at the end of the month. Expectations are growing that this increase will be waived given the hit to demand caused by the pandemic but a meeting of technical experts at OPEC on Tuesday gave no clear recommendation.

Crude futures traded 0.3% higher at $41.55 a barrel, while the international benchmark Brent contract rose 0.6% to $44.02.

Elsewhere, gold futures fell 0.1% to $1,82.95/oz, while EUR/USD traded 0.2% higher at 1.1879.