European shares jump for second straight session on stimulus
European shares surged on Wednesday following a strong rally in the previous session, as investors bet on unprecedented stimulus measures to ease the economic pain on businesses and households from the coronavirus pandemic.
The pan-European STOXX 600 index was up 4.2%, with energy, autos, insurers and financials jumping between 5.4% and 6.7%. With an 8% surge on Tuesday, swings last seen at the height of the 2008 financial crisis, the benchmark index has recovered its losses from mid March, but remains more than 25% below its record high last month.
On Wednesday, U.S. officials reached a deal on a $2 trillion package to aid small businesses and Americans hit by layoffs due to the health crisis, but with growing evidence of a breakdown in economic activity, analysts said a global recession was looming.
European airlines, one of the worst hit sectors from travel restrictions and evaporating passenger numbers over fears of contagion, have appealed to governments for bailout packages to prevent a collapse of the aerospace industry.
Air France-KLM, British Airways-owner IAG , Ryanair and EasyJet gained between 7.2% and 13.2% amid the broader rebound. German shares jumped 3.7% after posting their best day since 2008 on Tuesday, while Europe’s fear gauge fell for the fifth day in a row as a modicum of calm returned to financial markets.
With the pandemic still far from contained in Europe, several more companies have warned of lower profits, layoffs and a halt in business activity amid widespread national lockdowns. German conglomerate Thyssenkrupp said it would cut 3,000 jobs at its steel unit by 2026 as part of a wage deal it struck with powerful labour union IG Metall. Its shares rose 22.7% and were among the biggest gainers on the benchmark index.
Pest control company Rentokil Initial slumped 9% and was one of the biggest drags on the STOXX 600 after withdrawing its 2020 forecast and saying it was clamping down on spending to deal with the collapse of some business.