European shares gain on oil boost as economies reopen
Reuters
Published May 18, 2020 03:32AM ET
Updated May 18, 2020 05:00AM ET
By Sruthi Shankar
(Reuters) - European shares bounced on Monday after their worst week in two months, as investors hoped for a gradual economic recovery with many countries easing coronavirus-led lockdowns.
Energy majors Total SA (PA:TOTF), BP Plc (L:BP) and Royal Dutch Shell Plc (L:RDSa) rose nearly 6%, leading market gains as oil prices climbed by more than $1 a barrel, supported by output cuts and signs of gradual demand recovery.
France's Total was also boosted by news that it called off plans to acquire Occidental Petroleum Corp's (N:OXY) assets in Ghana, and agreed to buy up assets from Energías de Portugal (LS:EDP).
The pan-European STOXX 600 (STOXX) rose 2%, with bourses in Frankfurt (GDAXI), Paris (FCHI) and London (FTSE) also rising more than 2%.
"The markets are heavily influenced by monetary policy and seem to ignore some longer-term threats," said Teeuwe Mevissen, senior macro strategist at Rabobank.
"Technically also, the indexes have difficulty in reaching late-April highs. We've entered a phase where indexes will lose some strength."
Governments and central banks globally have unleashed unprecedented stimulus to prop up the economy, helping the STOXX 600 recover nearly 25% from its March lows despite dire readings of business activity and rising U.S.-China trade tensions.
U.S. Federal Reserve Chairman Jerome Powell said over the weekend it would be a long road to recovery, but added the central bank was "not out of ammunition", pointing to the willingness to expand existing programs or add new ones.
Also raising hopes of a gradual return to pre-coronavirus levels of activity, shops, restaurants and hair salons prepared to reopen in Italy on Monday, while other centres of the outbreak such as New York and Spain gradually lifted restrictions.
French automakers Renault SA (PA:RENA) and Peugeot SA (PA:PEUP) gained 3.2% and 2.8%, respectively, after finance minister Bruno Le Maire told a local radio channel the government was hoping to announce a plan within 15 days to help the country's automobile sector.
German conglomerate Thyssenkrupp AG (DE:TKAG) jumped 4.5% after a source told Reuters it was in talks with international peers about consolidating its loss-making steel business.
Fiat Chrysler Automobiles NV (MI:FCHA) jumped 4.1% after confirming its Italian unit was working with Rome to obtain state guarantees on a 6.3-billion-euro ($6.8 billion) loan facility.
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Swedish radiation therapy gear maker Elekta (ST:EKTAb) surged 11.2% to the top of STOXX 600 after it won an order worth around $200 million and was set to exceed its target for bookings of its new radiation system Unity.
Among decliners, Norwegian Air Shuttle ASA 's (OL:NWC) shares tumbled 15.7% as the company said its issue of new equity was completed.
Written By: Reuters
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