European stocks rise hoping for new incentive measures

US, WASHINGTON (NEWS OBSERVATORY) — European stock indexes are rising on Wednesday amid investors’ hopes that the European Central Bank and eurozone governments will approve stimulus measures after the Federal Reserve suddenly cut rates on the eve.

The pan-European STOXX 600 index rose 1.2% to 14:09 Moscow time, while mining-sensitive stocks of mining companies, including Rio Tinto and Arcelormittal, continued to recover from a sharp drop last week.

The Italian index is growing at 1.1%, even though authorities have reported that a new quarantine zone is likely to be created to curb the spread of coronavirus.

The Fed’s decision to cut interest rates by 50 basis points the day before took investors by surprise, as it emphasized the economic impact of the coronavirus and raised questions about the effectiveness of monetary policy measures.

Now traders estimate the probability of a ECB rate cut next week at 90%. Meanwhile, a member of the board of governors of the ECB and the head of the Central Bank of France, François Villeroi de Halo, called on governments to help the economy with budgetary measures on Tuesday.

“It’s pretty clear that central banks are keen to stop any decline that they see, and this increases the likelihood of softer fiscal policies in certain regions,” said Will James of Aberdeen Standard Investments.

Shares of Roche Holding AG rise in price by 1.6% after the Chinese authorities announced their intention to use the arthritis medicine manufactured by the Swiss pharmaceutical company to treat some patients with coronavirus.

Paper maker chip maker Dialog Semiconductor grew 4.3%. According to the company, supply chains and chip manufacturers will return to normal operation in the second quarter.

Metro shares were down 1.5% after Reuters reported that the US Sysco had turned to a German wholesale retailer about a possible merger.


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Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.