European Stocks Post Best Two-Day Gain Since 2008 on Stimulus
European Stocks Post Best Two-Day Gain Since 2008 on Stimulus
(Bloomberg) -- European equities on Wednesday capped their biggest back-to-back rally since October 2008, boosted by renewed optimism about stimulus measures to combat the economic blow from the coronavirus.
The Stoxx Europe 600 Index closed 3.1% higher, taking its two-day advance to 12%, helped by investor relief about aid plans from the U.S. to Germany. All 19 industry groups climbed, with energy and travel and leisure shares leading gains.
Germany is considering a “targeted” stimulus plan to revive economic growth once the coronavirus epidemic subsides, Finance Minister Olaf Scholz said in a Bloomberg TV interview. The country also approved additional borrowing to combat the fallout from the outbreak. In addition, European authorities are weighing more relief for banks dealing with bad loans because of the coronavirus.
In the U.S., the White House and the Congress agreed on a fiscal package of more than $2 trillion, while
“The old adage is that when policymakers start to panic, as an investor you can stop panicking,” Graham Secker, chief European equity strategist at Morgan Stanley, said on Bloomberg TV. “There will probably be some further tricky days ahead. But ultimately, the policy responses we’ve seen are so large, so broad across the world that they’re working to reduce volatility and stabilize markets, and actually puts quite a decent floor there.”
While European stocks tumbled as much as 38% from a peak in late February on fears about the spread of the virus, unprecedented stimulus measures by policymakers have spurred gains in recent sessions. The Stoxx 600 surged 8.4% on Tuesday.
Energy shares jumped 6.5% on Wednesday, while travel and leisure shares -- the worst-hit sector in the recent sell-off --gained 5.7%.
Among notable movers, Rentokil Initial Plc tumbled 8.2% after pulling its 2020 guidance and suspending its dividend. ThyssenKrupp AG gained 4% after expanding job cuts in an overhaul of its troubled steel unit.
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