European Shares Get Energy Boost From Potential Oil Supply Cuts

(Bloomberg) -- European equities closed higher, led by a rally in energy shares after U.S. President Donald Trump said he expects Russia and Saudi Arabia to cut production, boosting oil prices.

The Stoxx Europe 600 Index advanced 0.4% at the close, recovering from an intraday drop of as much as 1.4%. Oil and gas shares climbed 5.2% to lead gains among sectors, also helped by an earlier report that China is boosting its emergency oil reserves.

“It’s very complicated to predict where the market is going as we are seeing sharp moves with no real fundamental reasons,” said Alfonso Benito, chief investment officer at Spanish asset manager Dunas Capital. “The next most relevant event everyone is waiting for is the upcoming earnings season to have a feeling of how deep” the impact of the coronavirus will be, he added.

Stocks fell earlier on Thursday after data showing the number of Americans applying for unemployment benefits more than doubled to a record, underscoring concerns of the pandemic’s impact on the global economy.

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European shares are coming off their worst quarterly slump since 2002 as worries about the fallout from the coronavirus outbreak spur sweeping restrictions across the region. Trading volumes soared to a record in March as investors hustled to hedge portfolios, close bets and open new trades.

The number of contracts in Euro Stoxx 50 futures that changed hands in the last month jumped to the highest level ever. Cash equity trading followed suit as exchanges in Frankfurt, London and Paris experienced volumes about twice what they were in March 2019.

While the Stoxx 600 had bounced off its mid-March low amid unprecedented stimulus measures and signs of the infection stabilizing in Italy, investors and strategists are split on whether the market has bottomed.

Stoxx 600 oil and gas have now recouped about half the losses seen since the market sell-off that began in late February. Miners also outperformed on Thursday, while a retreat in travel and leisure shares -- the biggest fallers in the rout -- tempered gains in the broader benchmark.

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