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European Indexes Rise as Investors Hope for More Stimulus

Shares of the European region climbed all on Wednesday as investors were optimistic regarding the ECB and euro zone authorities intention to announce incentive measures after the U.S. Fed cut interest rates in an emergency move.

The Fed’s key rate lowering by 50 bp on Tuesday got Wall Street a surprise as it intensified the economic impact of the coronavirus and raised questions  with regard to the efficacy of monetary easing steps.

So, traders now await with a 90 percent chance the ECB to lower rates next week as well, though Francois Villeroy de Galhau, a central bank policymaker, called on governments for additional fiscal help on Tuesday.

The pan-regional STOXX 600 index jumped by 1.42 percent, to 386,56 at 1158 GMT with growth-dependent mining companies including Rio Tinto (+1.35) and ArcelorMittal (+2.81) extending their ricochet from sharp declines last week.

european shares surge hoping for stimulusPhoto: Reuters

Healthcare sector advanced too, with Roche Holding AG securities gaining 1.7 percent after Chinese health authorities said it would use the Swiss pharma company’s arthritis medicine to cure some Covid-19 virus patients in severe cases.

Shares of Dialog Semiconductor surged by 3.41 percent after it predicted the chip supply chain and contract manufacturers activity resuming Q2 after short-term disruption caused by the infection.

Travel and leisure index registered modest gains as hotel and airline shares extended decline on worries over demand.

  • UK’s FTSE 100 grew by 1.58 percent, to 6,824;

  • Germany’s DAX jumped by 1.41 percent, to 12,153;

  • France CAC added 1.46 percent, to 5,472;

  • Italy’s FTSE MIB advanced 1.44 percent, to 22,060;

  • Spain’s Ibex 35 rose by 1.16 percent, to 8,913 at 1205 GMT.

Meantime, investors almost ignored the final data on euro zone business activity for the previous month that painted a dismal outlook amid virus-affected supply chain disruptions.

Germany’s Metro shares decreased by 3.3 percent after Reuters’ report about a possible takeover with U.S. food distributor Sysco.

Intu shares sank by 28.03 percent on Wednesday, as the British shopping mall owner rejected its plan to tap investors for emergency cash.

Bayer shares surged by 3.99 percent, Daimler got a 2.10 percent rise, while BMM added 2.11 percent. Sanofi grew by 2.92 percent.

Source: Reuters, Marketwatch

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