European stocks closed higher on Wednesday, extending gains throughout the day, while US stocks halted a two-day slide as investors digested the latest round of corporate earnings and increased optimism about the eventual reopening of the economy.
Oil rose from record lows, while Wall Street’s S&P 500 Index rebounded from the worst sell-off in three weeks amid quarterly results that sparked speculation a recovery will be sooner than expected.
The Stoxx Europe 600 Index finished up 1.8 per cent in the wake of Tuesday's slump. In Dublin, the Iseq closed up 2.2 per cent, led by a surge for cement-maker CRH.
In London, the blue-chip FTSE 100 was up 2.3 per cent, while the more domestically focused FTSE 250 was up 1.2 per cent. In Germany, the Dax rose 1.6 per cent, while in France the Cac 40 was up 1.25 per cent. Italian stocks gained 1.9 per cent after prime minister Giuseppe Conte said Italy is likely to start easing its coronavirus lockdown from May 4th.
Treasuries edged lower along with the dollar and European bonds. Euro zone policy makers plan to hold a call on Wednesday evening where they may discuss whether to accept junk-rated debt as collateral from lenders, according to officials familiar with the matter.
Investors are continuing efforts to assess the hit to the global economy from the pandemic, with the oil market chaos suggesting it will be deeper or longer than anticipated by those who drove the S&P 500 up 28 per cent from its March lows.
Corporate earnings
Meanwhile, corporate earnings have been mixed. Chipotle Mexican Grill withdrew its guidance, while Netflix said it added nearly twice as many subscribers as predicted in the first quarter and Kimberly-Clark rallied after reporting strong toilet-paper sales.
Roche Holding said it still expects a small profit gain this year as demand for its best-selling medicines holds up and the drugmaker works on developing tests for Covid-19.
“There’s no way you can predict earnings right now,” Michael Cuggino, portfolio manager at Pacific Heights Asset Management, said on Bloomberg TV.
“It’s virtually impossible until we have more visibility with respect to how to world comes out of the coronavirus on the other side.”
Elsewhere, the Australian dollar rose as better-than-expected retail sales data triggered the unwinding of some short positions.
Stocks slipped in Japan but climbed in other major Asian markets. Gold rebounded to $1,700 an ounce. – Bloomberg
