European Stocks Advance Most in Two Weeks on Easing Virus Toll
European Stocks Rally on Easing Virus Death Toll in Epicenters
(Bloomberg) --
European equities gained the most in nearly two weeks after reported death tolls from the coronavirus showed signs of easing in several hot spots of the health crisis.
The Stoxx Europe 600 Index closed 3.7% higher, as automakers and travel and leisure shares led a broad rally in sectors. Energy shares underperformed as oil gave up some of last week’s gains amid uncertainty over a deal to end the crude price war, while defensive shares also lagged. The benchmark index has recouped about a quarter of the losses seen since Feb. 19.
U.K. deaths slowed for a second day, while Germany and Spain reported lower numbers of new cases, and fatalities in the state of New York fell for the first time two weeks. The economic impact of the pandemic on corporates is becoming more apparent as more firms lower their guidance and suspend dividends.
“Investors are focusing on the optimism that there’s a stabilization in the rate of deaths from the virus and on the first-quarter reporting season where they hope to get more visibility,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Gossler & Co. “In the long term, there are many reasons not to be too pessimistic: in addition to the massive stimulus measures and the enormous relative attractiveness of equities, the dry powder of many investors -- the holdings in money-market funds -- have reached a record level.”
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Europe’s main stock benchmark has climbed about 19% since an intraday low on March 16, while Germany’s DAX Index has advanced about 22% in the period.
Despite the market’s rebound since the mid-March trough, Citigroup Inc. strategists remain cautious on the outlook for stocks, keeping a defensive sector allocation. “We expect global EPS (earnings-per-share) to fall by around 50% in 2020, which is probably not yet reflected in equity markets,” strategists led by Robert Buckland wrote in a note.
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