(Reuters) – European stocks rose slightly at the close after the swing for most of Monday’s session, as traders turned their attention to the additional injections of support they now expect from major central banks after the coronavirus epidemic.
The DAX graph of the German stock price index is illustrated on the Frankfurt Stock Exchange in Germany on February 2, 2020. REUTERS / Staff
The pan-European STOXX 600 index closed up 0.1% after falling 12% last week, their worst weekly result since the 2008 financial crisis. Oil and gas companies .SXEP led the gains, prices crude oil which jumped 5%. [O/R]
Feelings firmed as the factory’s gloomy February activity outside of China due to the virus fueled hopes for further stimulus, even as new infections in the country subsided .
“The tough but non-recessive blow to global growth is also facing a political response to mitigate some of the negative economic consequences,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“It should ultimately bode well for risky assets, but volatility should remain high in the short term until this trajectory becomes more apparent.”
The virus continues to spread elsewhere. The United States reported their second death, while the United Kingdom reported a total of 36 cases on Sunday.
Italy, the most affected in Europe, saw its death toll drop to 52 from 34 in 24 hours. Milan’s .FTMIB defeated stocks continued to slide, despite reports that the government would introduce measures worth 3.6 billion euros ($ 3.5 billion), or 0.2% of proceeds gross domestic product (GDP) this week to soften the blow.
Traders are now betting that the US Federal Reserve will cut interest rates by 50 basis points (bp) this month, while the European Central Bank is expected to cut rates by 10bp at its April meeting.
Investors paid little attention to data showing that the German manufacturing sector softened further in February. IHS Markit said the prospect of supply chain disruptions due to the virus epidemic means the data could be misleading.
Meanwhile, Britain and the European Union were to start talks on their future relationship after Brexit. The two sides say they want to reach an agreement by the end of the year.
Travel and leisure stocks .SXTP continued to fall, down 2.7%, penalized by a drop of almost 5% in Ryanair shares in Ireland (RYA.I).
The low-cost airline said it would cut routes to and from Italy, one of its biggest markets, by 25% for three weeks, due to a sharp drop in bookings since the virus epidemic.
Telecommunications equipment manufacturer Nokia (NOKIA.HE) rose 1.4% as longtime CEO Rajeev Suri plans to step down in September.
SES satellite operator (SESFd.PA) fell 30% after lowering its profit and revenue forecast for 2020, projecting a slowdown in its video and network divisions. [nL8N2AV17L]
Reports by Sruthi Shankar and Shreyashi Sanyal to Bengaluru; Editing by Sriraj Kalluvila and Mark Heinrich
