European equities rallied at the open, building on Monday’s gains, as a cautious optimism rippled through global stock markets that the spread of coronavirus was decelerating.
The continent-wide Stoxx Europe 600 added 2.7 per cent as trading began, with gains of 2.8 per cent for London’s FTSE 100, 3.3 per cent for the CAC 40 in Paris and 3.8 per cent for Frankfurt’s Dax 30.
The positive mood in Europe mirrored that in Asian trading, where equity markets climbed for a second day, and built on a Wall Street rally that saw the S&P 500 surge 7 per cent, notching its best day in a fortnight.
Jingyi Pan, a strategist at IG Group, described a “lightened mood” across markets following reports of a slowing in the rate of deaths from the pandemic.
The upswing in stock markets signalled a cautious embrace of an emerging narrative that the so-called coronavirus curve, a measure of how rapidly the disease is spreading, is flattening.
Austria is on course to become Europe’s first country to ease strict quarantine measures, while the daily death toll in Spain, Italy and France is continuing to decrease.
Japan’s Topix closed almost 2 per cent higher while China’s CSI 300, which was closed for a public holiday on Monday, rose 2.1 per cent.
Donald Trump, US president, tweeted on Monday that there was “light at the end of the tunnel”, after New York on Sunday recorded its first reduction in daily cases since the crisis began. Wall Street’s gains on Monday marked the S&P 500’s eighth best day since the end of the second world war.
However, “a lot of investors this time will be more on the cautious side, just because this time . . . it’s very, very different from anything we’ve seen before,” said Andrew Sullivan, Hong Kong-based director at broker Pearl Bridge Partners.
“Unlike the financial crisis, this is not a financially engineered problem,” he added. “This is a health problem.”
Oil prices rose, resuming a rally on hopes that Saudi Arabia and Russia would reach a deal that would reduce supply and underpin sliding prices. The rally, which boosted the price sharply late last week, had been interrupted on Monday on concerns over the deal, before plans were announced for an emergency meeting of Opec oil ministers this Friday.
Brent crude, the international oil benchmark, added 2.4 per cent.