European stocks closed higher on Tuesday as the Federal Reserve cut interest rates to curb slowing economic growth following the coronavirus epidemic.
The pan-European Stoxx 600 index closed provisionally upwards of more than 1%, after having registered a rise of 3% following the decision of the American central bank. Most sectors finished higher, although banks resisted the downward trend of more than 1%.
The markets had widely expected the Fed to cut 50 basis points at its next meeting of the Federal Open Market Committee later this month. The emergency rate cut came shortly after the G-7 announced it would hire unspecified tools to help the global economy deal with the threat.
On Wall Street, the markets first rallied on news from the Fed before falling back into negative territory. The Dow Jones Industrial Average fell about 400 points, while the S&P 500 and Nasdaq indices were also negative.
New cases of the virus continue to decline in China, where the flu outbreak began. But cases are increasing elsewhere, with South Korea, Iran and Italy being the most affected countries outside of China.
At the same time, inflation in the euro area fell in February compared to the previous month, meeting analysts’ expectations. Consumer prices rose 1.2% in February year-over-year, after rising 1.4% in January, data from Eurostat, the official statistics agency for the economy, showed. ‘EU. This is mainly due to a 0.3% drop in energy prices.
The biggest movers
Qiagen shares jumped almost 17% after announcing that Thermo Fisher Scientific had launched a $ 12 billion offer for the German genetic testing company.
Lufthansa led a takeover attempt to get shares of struggling airlines up nearly 9% while British Airways’ parent company IAG gained more than 7%.
At the other end of the European benchmark, Hiscox fell more than 5% after UBS lowered its price target, while Italian lender Banco BPM fell 8%, as investors reacted negatively to his new business plan unveiled on Tuesday.