Shares Slip as U.S. Presidential Debate Looms

European shares slipped on Tuesday as investors awaited the first U.S. presidential debate and eyed progress of a fiscal stimulus package in Washington, Reuters informs.

The broader Euro STOXX 600 fell 0.4%, eroding hefty gains from a day earlier, with indexes in Frankfurt, Paris and London each losing between 0.4%-0.5%.

Among the sectors in negative territory: growth-sensitive banks, automakers and travel & leisure, all down between 0.7% and 0.9%.

Investors are weighing the potential impact on the U.S. economy of either the re-election of President Donald Trump or a victory for Democratic presidential nominee Joe Biden.

Many see a Biden victory increasing the chances of further fiscal stimulus to counter the economic damage from the coronavirus pandemic, judging such a scenario would be a boon for stocks.

“What seems clear is that were you to see a blue wave, a Democratic sweep, you’d see substantial fiscal stimulus,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “The risk, I have always thought, to this recovery is premature fiscal tightening.”

Biden’s campaign has seized on a fresh line of attack on the eve of the debate with Trump – set for after the U.S. market close – accusing the Republican incumbent of gaming the system to avoid paying his fair share of taxes.

“Tonight’s debate will be critical, since it represents one of the last set-piece opportunities for either candidate to change the contours of the race,” Deutsche Bank analysts wrote in a note.

U.S shares were set to open lower, with futures for the S&P 500 and Nasdaq giving up earlier gains to slip into negative territory. Hard-hit sectors like hotels, banks and airlines had made strong gains on Monday.

The MSCI world equity index, which tracks shares in nearly 50 countries, was flat.

As the global death toll from COVID-19 rose past 1 million, according to a Reuters tally, investors have remained focused on prospects for a stimulus package to help the U.S. economy recover from the damage wrought by the virus.

U.S. House of Representatives Speaker Nancy Pelosi said on Monday that Democratic lawmakers unveiled a new, $2.2 trillion coronavirus relief bill. Pelosi in recent days has said she thinks a deal can be reached with the White House on a new coronavirus relief package and that talks were continuing.

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