European Shares Rebound As Spread Of Virus Slows Down

European stocks rose sharply on Monday as new coronavirus infections showed clear signs of a slowdown and Italy followed several other European countries in announcing that it will begin to phase out current coronavirus lockdown measures.

Italian government bond yields dropped as ratings agency S&P Global affirmed Italy’s credit rating at ‘BBB/A-2’, while keeping the negative outlook because of the expected surge in public debt. The announcement helped calm worries about a potential junk rating for the euro zone’s third largest economy.

Amid expectations for more stimulus measures, investors looked ahead to a slew of central bank meetings this week for further direction.

Earlier today, the Bank of Japan expanded monetary stimulus and pledged to buy unlimited amount of bonds to keep borrowing costs low.

The pan European Stoxx 600 jumped 1.8 percent to 335.40 after losing 1.1 percent on Friday.

The German DAX rallied 2.4 percent, France’s CAC 40 index advanced 2.4 percent and the U.K.’s FTSE 100 was up 1.6 percent.

British industrial equipment rental company Ashtead Group soared 7 percent. In its Covid-19 trading update, the company said it was trading in line with expectations in the beginning of March, and this continued through the second week of March with limited impact from the consequences of the virus pandemic.

InterContinental Hotels Group (IHG) advanced 4.4 percent. The multinational hospitality company said it has secured new financing arrangements, which includes amending its syndicated revolving credit facility to include a waiver of existing covenants until 31 December 2021.

Also, the Bank of England confirmed IHG as an eligible issuer for the U.K. Government’s CCFF, and IHG has issued 600 million pounds in commercial paper under this facility.

Redrow rose 1.3 percent. The housebuilder said that it intends to commence mobilizing sites week commencing 11th May, with a phased return to construction on 18th May, subject to conditions.

Energy giant BP Plc. gained over 1 percent after confirming its plan to complete the sale of its Alaska business to Hilcorp in June 2020.

Swiss logistics firm Kuehne + Nagel International fell nearly 3 percent after its first-quarter earnings declined 23.2 percent to 139 million Swiss francs from last year’s 181 million francs.

Air France-KLM shares jumped 2.2 percent. The company said it engaged in talks with the French and Dutch governments regarding the implementation of specific aid measures that would enable them to maintain their solvency.

Deutsche Bank shares surged almost 12 percent. The German bank said it expects to report first-quarter group profit before tax of 206 million euros and net income of 66 million euros, above market expectations.

The lender noted it will continue to work towards its 2022 targets of a 12.5 percent CET1 ratio target and 5 percent leverage ratio.

Bayer AG jumped 4 percent. The pharmaceutical and life sciences company said that its first-quarter net income increased 20 percent to 1.49 billion euros from last year’s 1.24 billion euros.

The company said the Covid-19 pandemic led to higher demand and increased sales at some business units, partly due to inventory buildup, while the restrictions related to the pandemic are adversely impacting certain other business.

Volkswagen gained 2.9 percent. The automaker announced that the Volkswagen Passenger Cars brand resumed vehicle production at its Wolfsburg plant starting Monday at 10 to 15 percent of capacity. The company plans to increase production to around 40 percent the following week.

Airline Lufthansa soared about 8 percent after a German minister said it would need to be supported.

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