Investors capture positive news for equity markets

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Register on the LSE building

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European stocks joined a rally on Wall Street and Asia as investors caught signs that the spread of the coronavirus in some hot spots may be slowing.

In London, Paris and Frankfurt, stocks rose about 3% after a 7.7% rise in the New York Dow Jones index.

“Equities continue to rise as news from key countries like Spain and Italy remains positive,” said IG analyst Chris Beauchamp.

Pound and oil prices also edged up.

In the UK, travel, tourism and entertainment companies were among the biggest winners. Carnival jumped 23%, while Easyjet increased 20%. British Airways owner IAG increased 12%.

In the early afternoon, 17 FTSE 100 companies were trading more than 10%.

The FTSE 250, considered more representative of the British economy, traded more than 5%.

Meanwhile, oil stocks also rose slightly, with traders expecting the end of a price war between Russia and Saudi Arabia.

Investor sentiment was boosted by news that the death toll in Spain, which was hit hard by the coronavirus pandemic, had dropped for the fourth consecutive day, a sign that the country may have reached its peak.

There has also been a slowdown in new infections in Italy, also ravaged by the virus. The news that some countries, including Austria and Denmark, have taken small steps to loosen their locks has also contributed to confidence.

“Investors are responding to indications that foreclosures in the United Kingdom, the United States and Europe are starting to” smooth out the “coronavirus infection and death curve,” said Russ Mold, chief investment officer at AJ Bell.

However, he added, “Market relief should only last for so long, and attention will soon turn to how countries intend to break out of the current containment measures that actually pushed the button. world economy break. “

Stimulus

Despite gains on Monday and Tuesday, the FTSE 100 is still down 25% from its highest level in January, before the pandemic resulted in closings across Europe and the United States.

Added to the positive financial news are additional measures to support the economies, including a $ 1 trillion package in Japan and measures taken by the central bank in China.

And with ink barely dry on a $ 2 trillion bailout package passed by Congress last month, Donald Trump said he was in favor of another massive spending program, this time targeting capital projects. infrastructure.

There are also reports that EU leaders are close to a bailout for the countries most affected by the pandemic.

EU finance ministers are scheduled to hold a video conference on Tuesday evening when they agree to use the euro 443 billion bailout fund.

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