Investors will be watching European stocks today, after the US Federal Reserve announced an emergency rate cut on Monday.
Context: European shares closed higher on Tuesday, although most indices were down from their highest levels reached during the trading day. The Fed’s decision to cut rates helped almost all sectors to post gains in the session, while banking stocks bucked the trend.
Details: Markets were widely expecting the US Federal Reserve to lower rates at its March meeting. However, the emergency rate cut came after the G-7 finance ministers and central bank chiefs announced that they will use “all appropriate policy tools” to deal with the coronavirus risks and support the global economy.
Banking shares declined in the previous session following the Fed’s announcement. Shares of ABN Amro, Societe Generale and Deutsche Bank all posted a decline of over 3% each.
The Stoxx Europe 600 climbed 1.4% yesterday, with pharmaceutical and food producers stocks leading the rally. The FTSE 100 rose 0.95%, while the German 30 index spiked 1.08%.
Even as cases outside China have been on the rise, investors took some solace from the continued decline in daily new confirmed coronavirus cases . China confirmed 119 new confirmed cases yesterday, versus 125 on the day before.
In corporate news, Qiagen shares jumped around 17% after Thermo Fisher Scientific announced plans to acquire the German company for $12 billion. Shares of Metro spiked about 19% following a Bloomberg report of Sysco approaching the company for a possible takeover.
On the economic data front, Eurozone inflation shrank in February, meeting market estimates. Consumer prices rose 1.2% in February, versus a 1.4% rise in January.
Why it matters: After a strong performance in Tuesday’s session, all eyes are on the basket of economic data scheduled for release today, including services PMI, composite PMI and retail sales.
What to watch: The Eurozone IHS Markit services PMI is expected to rise to 52.8 in February, from 52.5 in the prior month. Analysts expect composite PMI to rise to 51.6 in February, from a reading of 51.3 in January. Preliminary estimates are pointing towards 0.6% growth in retail sales for January, versus a 1.6% decline in December.
Other Markets: Most European indices closed trading higher on Tuesday, with the FTSE 100, German 30 and French 40 up 0.95%, 1.08%, 0.5% and 1.12%, respectively.