European stocks continue upward on further slowdown in coronavirus outbreak
Stocks in Europe continued pushing higher after the World Health Organisation’s latest update on the new coronavirus showed a further slowdown in new cases
Stocks on the Continent continued pushing higher and the Dax notched up a fresh record high after the World Health Organisation’s latest update on the new China coronavirus showed a further slowdown in the rate of new cases.
The WHO ‘s latest update, published the night before, showed that the compound daily growth rate in the number of virus cases had held below 10.0% for a second consecutive day, analysts at ShoreCap pointed out.
Equity traders are buying into the markets as the fear surrounding the health crisis has dipped. The number of confirmed coronavirus infections in China is on the rise, but the growth rate seems to be cooling, hence why dealers are less worried about the situation, said David Madden at CMC Markets UK.
China’s Xi Jinping, claimed the state’s actions to get the crisis under control are working.
Against that backdrop, the benchmark Stoxx 600 jumped 0.90% to 428.48, alongside a gain of 0.99% to 13,627.84 for the German Dax while the Cac-40 was ahead by 0.65% to 6,054.76.
A weakening euro and persistent promise of more stimulus lifted Germany’s DAX to a new record high, even as the economy is in a broad slowdown and industrial production achieves a post-crisis low, said Neil Wilson, chief market analyst at Markets.com.
In parallel, front month Brent crude oil futures were 1.73% higher to $54.21 a barrel on the ICE, but only a smidgen above their 52-week lows, as Russian Federation energy minister, Alexander Novak, said his country was carefully studying an OPEC+ recommendation for extending the group’s oil output curbs.
Euro/dollar meanwhile was up 0.05% to 1.0918.
According to Interfax, Novak also said he would discuss implementation of the OPEC+ deal with the country’s oil bosses the next day.
IG’s Chris Beauchamp also saw reasons to be upbeat, pointing out that market breadth was improving and that the long-term bullish trend in stocks was intact.
However, he also cautioned that there was yet “[no] end in sight for the crisis in China”, highlighting the lack of buying in crude oil which “some will worry that equities are beginning to run out of road in the short-term.”
TUI AG topped the Stoxx 600 leaderboard all day after it kept the top end of its guidance range for full-year profits, with strong trading in its Markets and Airlines arm offsetting the costs from the extended grounding of its Boeing 737 Max jets.
German financial factoring and leasing outfit Grenke AG was higher too after hiking its full-year dividend from €0.80 per share to €0.88.
Umicore was also higher, after analysts at Citi told clients that the pre-results 2020 consensus of €570.0m was likely to see upgrades thanks to the company’s Recycling division. And following a sell-side meeting with the company’s CEO, CFO and IR head, Deutsche Bank bumped up its target price from €39.0 to €40.0.
France’s Eiffage was also on the up, after Westminster gave the green light to the £100.0bn HS2 rail project for which it is a contractor.
Stock in NMC Health was the worst performer on that same pan-European gauge, after US private equity outfit KKR dismissed rumours about a possible bid for the Abu Dhabi-focused healthcare operator.
In remarks prepared for a speech to the European Parliament, European Central Bank chief, Christine Lagarde, called for national governments to step up to the plate with higher spending and structural reforms.
But monetary policy cannot, and should not, be the only game in town, she said. The longer our accommodative measures remain in place, the greater the risk that side effects will become more pronounced.
Spain’s new government cut its GDP growth forecasts for 2020-23 on Tuesday, with that for the current year lowered from 1.8% to 1.6%.
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