Portfolio

Europe midday: Stocks buoyed by rally in crude oil futures

By Alexander Bueso

Date: Thursday 02 Apr 2020

Europe midday: Stocks buoyed by rally in crude oil futures

(Sharecast News) - Stocks on the Continent are keeping their heads above water following the previous day's thrashing, helped by a rebound in oil futures, even as investors kept a close eye on the economic fallout of the Covid-19 pandemic.
Some City-based traders were also keeping close tabs on reports of new cases being found in China.

"We still appear to be in the foothills of this particular crisis as indicated by the extension of lockdowns in Germany and Italy, yesterday with the likelihood that the lockdown in the UK will be similarly extended in the coming days," said Michael Hewson, chief market analyst at CMC Markets UK.

"What is more worrying is that there appears to be a second wave of infections in China, which would appear to suggest that even if we get on top of this particular outbreak, some levels of restrictions are likely to remain for quite some time."

As of 1230 GMT, the benchmark Stoxx 600 was up by 0.47% to 312.22, while the German Dax was ahead by 0.32% to 9,575.98 and the FTSE Mibtel was adding 1.39% to 16,773.65.

In parallel, front month Brent crude oil futures were rallying 9.5% to $27.33 a barrel on ICE after US President Donald Trump said overnight that Russia and Saudi would be able to resolve their dispute.

Linked to the above, the Stoxx 600 Oil&Gas sector sub-index was 6.4% higher to 226.75.

On the coronavirus front, Spain registered its deadliest day yet of the crisis on Thursday with 950 fatalities, although at 7.9% the daily rate of change in new infections remained well below the 20% observed just a week before.

In Italy the daily rate of new infections was running at 3.6%.

Not surprisingly, the latest economic news was very negative, especially in Spain and Italy.

According to social security data released in Spain, 833,000 persons lost their job in March while a further roughly 620,000 were laid-off temporarily, but will retain their wages as part of a government programme to buttress demand known as ERTEs.

Meanwhile, Italian business lobby group, Confindustria, reported that industrial output registered a "devastating" 16.6% contraction in March, the most ever, and was down by 5.4% in the first quarter, the sector's worst showing in 11 years.

At the euro area level, Eurostat reported that producer prices fell at a 0.6% month-on-month pace in February, for a 1.3% fall year-on-year, amid a 2.3% drag from energy prices.

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