European stock markets advance on easing virus fears

European stock markets advance on easing virus fears

LSE London Stock Exchange
Logo of the London Stock Exchange.

LONDON: European stocks advanced on Tuesday (Feb 11) on easing investor concerns over the economic impact of China's coronavirus outbreak.

Investors also heard cautious comments on the fallout by US Federal Reserve Chairman Jerome Powell in testimony to Congress.

The Fed is "closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy," Powell told US lawmakers.

London's stock market gained 0.7 per cent, Frankfurt added 1.0 per cent to come within reach of a new record high and Paris was nearly 0.7 per cent higher.

In New York, the Dow Jones index had risen by 0.1 per cent.

"You just can't keep equity markets down these days," said Neil Wilson, chief market analyst at Markets.com.

"Major markets struck fresh all-time highs as Jay Powell delivered his testimony to Congress and as fears about the spread of the coronavirus receded in the minds of equity investors," he said.

IG analyst Chris Beauchamp added that "European equities have continued the rebound begun yesterday in the US.

"But ... investors have yet to see an end in sight for the crisis in China and with other assets like oil so far refusing to respond in bullish fashion some will worry that equities are beginning to run out of road in the short-term.

All eyes were on China as the world's second-largest economy sputters back to life from a forced extension to the Lunar New Year holiday because of the outbreak, which has killed more than 1,000 people and disrupted major global supply chains.

Hong Kong closed up 1.3 per cent, while mainland China's benchmark Shanghai Composite Index was 0.4 per cent higher. Tokyo was closed for a public holiday.

The freshly-named COVID-19 virus that emerged in central China has spooked equity and oil markets for weeks as it spread to more than two dozen countries.

More than 42,000 infections have been confirmed so far in mainland China and President Xi Jinping has described the situation in Hubei, the outbreak epicentre, as "still very grave".

STIMULUS EXPECTATIONS

Analysts now expect Chinese authorities to unveil policies to ease the economic effect of the virus.

"While ... uncertainties remain around nCoV, one sure thing you can probably count on is that the mother of all stimulus measures will get laid down by the (Chinese central bank)," wrote Stephen Innes, chief market strategist for Asia-Pacific at AxiCorp, using a previous name for the virus.

A number of earnings reports are also expected this week, including from companies that could suffer a hit to their results.

Chinese tech giant Alibaba, Japanese automaker Nissan and MGM Resorts are among the firms scheduled to announce results.

China, the world's largest importer and consumer of oil, was already battling an economic slowdown when the coronavirus emerged.

Fears of a decline in demand from China, and the resulting supply glut, has caused oil prices to tumble in recent weeks.

But main oil contracts rebounded on Tuesday. Brent Crude was up 1.8 per cent while West Texas Intermediate rose by 1.2 per cent.

Key figures at 1630 GMT:

London - FTSE 100: UP 0.7 per cent at 7,499.44 points (close)
Frankfurt - DAX 30: UP 1.0 per cent at 13,627.84 (close)
Paris - CAC 40: UP 0.7 per cent at 6,054.76 (close)
EURO STOXX 50: UP 0.8 per cent at 3,822.18

Hong Kong - Hang Seng: UP 1.3 per cent at 27,583.88 (close)
Shanghai - Composite: UP 0.4 per cent at 2,901.67 (close)
Tokyo - Nikkei 225: Closed for public holiday

Euro/dollar: UP at US$1.0921 from US$1.0911 at 2200 GMT
Pound/dollar: UP at US$1.2947 from US$1.2915
Euro/pound: DOWN at 84.34 pence from 84.49 pence
Dollar/yen: UP at 109.86 yen from 109.77 yen

Brent Crude: UP 1.8 per cent at US$54.20 per barrel
West Texas Intermediate: UP 1.2 per cent at US$50.16

Source: AFP/de

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