Global stocks mixed as US stimulus hopes fade

Global stocks were mixed  on Tuesday ahead of a deadline to agree a pre-election US stimulus package, dealers said. In Europe, London and Paris stocks were higher in afternoon trades but Frankfurt lapsed into the red after an uninspiring performance in Asia.

New York trades began the day with gains after US housing starts rebounded slightly in September.

World oil prices eased back, a day after Opec and other major crude producers refrained from altering output policy despite weak virus-hit demand and stubborn oversupply.

Meanwhile, US Democrats and Republicans have been haggling over a new Covid-19 stimulus package.

House Speaker Nancy Pelosi has set a Tuesday deadline, fuelling fears that nothing will be approved before the November 3 presidential election.

“The likelihood of a deal taking place appears no more likely now than it was a week ago, with the window for it happening... closing fast, as tonight’s Pelosi-imposed Tuesday deadline for getting a deal agreed comes into view,” said CMC Markets analyst Michael Hewson.

“The lack of action is especially concerning given reports that coronavirus cases are rising in excess of five percent or more a day in 38 US states, raising concerns that the second wave that is currently sweeping across Europe is starting to build into a possible third wave in the United States.”

Pelosi’s spokesman said she held talks with Treasury Secretary Steven Mnuchin on Monday and would do so again Tuesday, adding that they continued to narrow their differences.

But even if they reach an agreement -- with US President Donald Trump saying he is happy to top Pelosi’s $2.2 trillion proposal -- Senate Republicans would still not be prepared to back a massive spending bill.

Investors are also keeping tabs on post-Brexit trade negotiations, with Britain welcoming signals that the European Union was ready to intensify them but saying the bloc’s commitments did not yet go far enough to restart face-to-face talks.

Britain’s chief negotiator David Frost said he had held a “constructive discussion” with EU counterpart Michel Barnier, but added on Twitter that the bloc “still needs to make a fundamental change in approach to the talks and make clear it has done so”.

The rouble eased on Tuesday, under pressure from rising COVID-19 cases at home and abroad as well as fading optimism over a potential U.S. stimulus package, while stocks inched higher, with shares in Russia’s top lender Sberbank outperforming peers.

At 1026 GMT, the rouble was 0.2% weaker against the dollar at 77.885 and had lost 0.6% to trade at 91.96 versus the euro, moving towards its weakest level since early 2016 of 93.32 it hit last month.

Russia reported a new record daily high of 16,319 coronavirus cases on Tuesday after authorities insisted strict restrictions to contain the virus were not needed.

Russia’s central bank, which slashed rates this year to help the economy amid the coronavirus crisis, is expected to keep rates on hold this Friday ahead of the U.S. presidential election.

Given the rouble’s weakening of the past few months, the central bank is likely to hold the key rate at 4.25% but may maintain its dovish tone regarding its future policy, said Valentin Zhurba, head of investment at MKB Private Bank.

“In the coming sessions we expect the dollar to maintain its position in the range of 77.5-80 roubles, seeing no reason to go beyond this border,” he said. Alleged Russian hacking attempts were in the spotlight after Britain and the United States on Monday condemned what they said were a litany of malicious cyberattacks orchestrated by Russian military intelligence.

Russian stock indexes were up after dropping in early trade.

Shares in Sberbank rose 2.2% after it said it had started paying 2019 dividends to the tune of 422.4 billion roubles ($5.43 billion), a record high for the Russian market.

Dividend payments can harm the rouble as investors sometimes convert rouble-denominated proceeds into foreign currency.

The rouble-based MOEX Russian index was 0.7% higher at 2,814.4 points, bouncing off its lowest mark since July 20 hit earlier on Tuesday.

The dollar-denominated RTS index was up 0.4% to 1,139.3 points, close to a more than five-month low.

Agencies