Europe close: Stocks jump on stimulus, tide turning against Covid-19 in Italy
Stocks staged their first big rally on Tuesday since the coronavirus pandemic took hold, finishing at their best levels of the session after US lawmakers said they were close to agreeing a spending plan to help buoy the economy and Germany said that it might ramp-up its own stimulus.
There was also a bit of good news on the coronavirus front out of Italy.
By the end of trading, the benchmark Stoxx 600 was ahead by 8.4% to 304, alongside a 10.98% jump for the Dax to 9,700.57, while the FTSE Mibtel was ahead by 8.93% at 16,948.60.
Significantly, the VStoxx gauge of volatility for the EuroStoxx 50 was down by 18.52% to 52.50, a possible hint that Tuesday's gains might stick, while gold futures jumped by over 5% to trade just below their 52-week highs.
In Italy, the number of coronavirus-related deaths increased to 743 from 601 the day before following two days of consecutive declines.
Nonetheless, the number of new infections extended its decline to a third day, slipping from 3,780 to 3,612.
"The tide is beginning to turn. Other countries in continental Europe also are recording slower growth in cases, though the new case numbers are still high in absolute terms, relative to their recent trend," said Ian Shepherdson at Pantheon Macroeconomics.
"But the absolute numbers are misleading; 2K new infections per day on a base of, say, 20K total cases is a clear improvement on 2K infections with a 10K base."
Over in the States, politicians from both sides of the aisle indicated that a fiscal stimulus plan might be voted on as soon as Wednesday, sending the Dow Jones Industrials to its biggest one day gain since 1933.
Oil & Gas stocks were wanted, with the Stoxx 600 sector gauge jumping 15.78%, alongside an advance of 15.07% for shares of insurers.
"Anyone jumping back in now will need to have nerves of steel," said Craig Erlam, senior market analyst at Oanda.
"Much of Europe is still in the acceleration phase, as is the US, which brings a huge element of uncertainty still, so this volatility is going nowhere."
France's Biomérieux dipped, having started the day up by more than a third and at a record high, after the US Food and Drug Administration gave the green light to its covid-19 diagnostic kits.
Germany's Qiagen on the other hand jumped 5% amid reports that it had begun shipping its covid-19 testing kits to the States.
Norwegian Air edged up 2% after the carrier unlocked loan guarantees worth $27m from two creditors, with the government now expected to offer roughly another $240m in cheap financing.
Tuesday's gains materialised despite survey results showing that economic activity in the single currency bloc was shrinking at its fastest pace since the Great Financial Crisis in what survey compiler IHS Markit termed an "unprecedented collapse".
IHS Markit's so-called composite Eurozone Purchasing Managers' output index fell from February's level of 51.6 to 38.9 in March, just as expected.
However, a separate gauge for services sector activity dropped from 52.6 to 28.4 (consensus: 40.0).
The latest news out of Spain regarding the Covid-19 pandemic was grim.
The country's health ministry reported that the number of new cases in Spain jumped from 33,089 on Monday to 39,673 on Tuesday, even as the number of fatalities jumped from 2,182 to 2,696.