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European markets climb as Fed cuts rates to fight coronavirus

The FTSE 100 closed 63.31 points higher at 6,718.2 at the end of trading on Tuesday.

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The FTSE 100 made gains as the US Fed announced a shock rates cut (Chris Radburn/PA)

The FTSE 100 made gains as the US Fed announced a shock rates cut (Chris Radburn/PA)

The FTSE 100 made gains as the US Fed announced a shock rates cut (Chris Radburn/PA)

The major European markets climbed for a second day on hopes that governments and central banks will intervene and provide stimulus in response to the coronavirus outbreak.

After a fairly cautious G7 conference call, volatile equity markets were sent into overdrive when the Federal Reserve took a surprise decision to cut rates, but gains were pared back during a rollercoaster session.

The FTSE 100 closed 63.31 points higher at 6,718.2 at the end of trading on Tuesday.

Connor Campbell, financial analyst at Spreadex, said: “It looked like the G7’s brightest and best financial minds had failed to deliver – and then the Federal Reserve went and announced an impromptu rate cut.

“For Europe, the region’s indices remained off their intra-day highs despite the Fed intervention.

“It might simply be that anything other than a co-ordinated action plan from the G7 was going to disappoint, especially following the Dow’s insane gains on Monday night.”

The European markets calmed down as the trading session went on, but still made significant gains on the back of a strong performance on Monday.

The German Dax increased by 1.08% while the French Cac moved 1.57% higher.

Across the Atlantic, the Dow Jones was also particularly volatile before stabilising in the red as traders tried to make up their mind about the Fed’s shock move.

Sterling moved up against the dollar as a result following four consecutive days of declines, while it also benefited from a 14-month high in construction PMI figures.

The value of the pound rose 0.61% versus the US dollar at 1.282 and was up 0.34% against the euro at 1.149.

In company news, travel firms clawed ground back after a run of dismal trading sessions.

Coronavirus
British Airways planes at Heathrow Airport (Steve Parsons/PA)

BA owner IAG was one of the day’s top performers, closing 31.3p higher at 464.4p after investor sentiment calmed.

Rivals such as Tui, easyJet and Wizz Air also finished the session higher.

Elsewhere, Greggs rose as the bakery chain revealed a big jump in profit and sales last year.

The food-to-go giant said it was heavily impacted by storms last month, but still posted 7.5% sales growth for the nine weeks to the end of February. Shares in the company increased by 76p to 2,166p.

Recruitment firm Robert Walters saw shares slide after it warned the coronavirus outbreak is likely to impact 2020 profits.

The group – which operates worldwide – said the spread of the virus is adding further uncertainty to an “unpredictable” global recruitment market. Shares decreased by 30p to 500p.

The price of oil slipped as it lost early gains as the early chatter about Opec potentially agreeing to cut output went quiet.

The price of a barrel of Brent crude oil decreased 0.36% to 52.77 US dollars.

The biggest risers on the FTSE 100 were IAG, up 31.3p at 464.4p, M&G, up 9p at 202.6p, Just Eat Takeaway, up 305p at 7,090p, and Legal & General, up 10.6p at 265.1p.

The biggest fallers on the index were Barclays, down 3.74p at 139.56p, Hargreaves Lansdown, down 35.5p at 1,519.5p, WM Morrison, down 4p at 176.1p, and Standard Chartered, down 12.2p at 538.2p.

PA