European shares claw back some losses as oil prices move higher
European shares on Tuesday recouped some of the brutal losses in the previous session, as oil prices gained and expectations of more stimulus measures eased anxiety around the global economic blow from the coronavirus outbreak.
The pan-European STOXX 600 gained 2.7% , but was far from making up for the 7% slump on Monday that pushed the index into bear market territory - seen as a 20% drop from recent all-time highs.
Europe’s oil index rose 3.6% as crude prices increased about 5% after the biggest one-day rout in nearly 30 years that sparked extreme volatility in global financial markets. The recovery gained some steam as investors pinned their hopes on coordinated policy actions from governments and central banks around the world to ease the hit from the outbreak. U. S. President Donald Trump promised a “major” step on Monday and said he would discuss a payroll tax cut with congressional Republicans.
With all of Italy under lockdown, the government is set to approve measures worth around 10 billion euros while officials estimate that Berlin could put together a stimulus package worth up to 50 billion euros. Germany’s finance Minister Olaf Scholz told a local media group on Monday the government would do “everything necessary” to stabilize it.
Monday’s rout in oil markets following a price war between Saudi Arabia and Russia added to fears of a further hit to global growth, already reeling under the impact of the outbreak. The STOXX 600 is still down 19.5% from all- time highs. Focus turns to the European Central Bank meeting on Thursday, with traders betting on another 10 basis point interest rate cut. Italian banks, which slumped 12% on Monday, were up 3%.
Corporate news also helped, with German chipmaker Infineon Technologies rising 5.4% after U.S. officials found no national security concerns with its proposed $10 billion takeover of U.S. firm Cypress Semiconductor Corp.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.