NEW YORK, March 27 — European stocks reversed course to end higher yesterday, tracking gains on Wall Street, while investors awaited a vote by EU lawmakers on emergency funds to cushion the blow from the coronavirus outbreak.
US stock indexes surged as a record reading in weekly jobless claims added to the case for more stimulus measures to combat the economic impact of the coronavirus pandemic.
The pan-European STOXX 600 index closed 2.6 per cent higher, adding nearly 15 per cent over the past three sessions. The index had fallen up to 2 per cent earlier in the day.
The index is still down 26 per cent from a record peak hit in February, with a recession in Europe looking imminent in the wake of widespread disruption to business due to coronavirus.
European Union lawmakers were expected later yesterday to approve emergency funds to cushion the bloc’s economic slump triggered by the pandemic and shore up hard-hit airlines by preserving their landing slots.
Overnight, the European Central Bank ditched a cap on how many bonds it could buy from any single euro zone country, clearing the way for potentially unlimited money-printing as part of its response to the outbreak.
“Seems that markets think the medicine has been found and that medicine is money. Today’s mover clearly is the jobless claims report,” said Teeuwe Mevissen, senior macro strategist at Rabobank.
“Market consensus is that this frightening figure was already priced in or could have been worse. I don’t buy this in all honesty. I think markets seem to not realize the true nature of what is going on and are priced for perfection.”
The pandemic showed no signs of stopping, with a continued uptick in cases and deaths across the bloc, while countries introduced tougher measures to try and curb its spread.
Italian and Spanish bourses ended 0.7 per cent and 1.3 per cent higher, respectively. The number of fatalities from Covid-19 in Italy topped 7,500, while those in Spain rose beyond 3,400, exceeding the total death toll in China.
The European travel and leisure industry led gains for the day, adding about 7.5 per cent as investors bought back into the sector worst hit by the outbreak.
German shares rose 1.3 per cent, while a survey showed consumer morale in Europe’s biggest economy tumbled to its lowest level since 2009.
Among individual movers, plane maker Airbus was among the largest gainers on the STOXX 600 after it said it was reducing the production of aircraft wings as it slows operations due to the pandemic. — Reuters