European stock index futures bounce on Fed's bond buying plan
Reuters
Published Jun 16, 2020 07:18
Updated Jun 16, 2020 07:40
(Reuters) - European stock index futures joined a global rally on Tuesday, ahead of the U.S. Federal Reserve's plan to kick off its corporate bond buying programme in an attempt to contain the economic damage from the COVID-19 pandemic.
The Fed is set to start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility (SMCCF), one of several emergency facilities recently launched by the U.S. central bank to shore up liquidity.
Euro Stoxx 50 futures (STXEc1) surged 2.7%, recovering from a slump in the past week that was fuelled by concerns of another wave of global coronavirus infections. German DAX futures (FDXc1) were up 2.8%, while FTSE 100 futures (FFIc1) gained 2.3%.
S&P 500 futures EScv1 also added 1.3%, looking set to extend gains for the benchmark S&P 500 index (SPX) for a third straight day.
"With second wave fears diverted, investors are having visions of the economy returning to pre-pandemic (levels) and are revelling in the incomprehensibly-large global stimulus that will eventually find its way into every liquid asset imaginable," said Stephen Innes, markets strategist at AxiCorp.
Historic monetary and fiscal stimulus has partly powered a rebound in European equity markets since a coronavirus-fuelled crash in March, with the pan-European STOXX 600 index (STOXX) now only about 18% below its February record high.
Earlier in June, the European Central Bank surprised financial markets by increasing the size of its own emergency bond buying by 600 billion euros ($680 billion) and saying the purchases would run six months longer than originally planned.
Still, the pace of the rally has slowed with mounting evidence of the corporate hit from sweeping lockdowns imposed to contain the spread of the respiratory disease. European travel (SXTP) and banking (SX7P) stocks, two of the worst hit sectors during the health crisis, remain more than 34% down on the year.
German airline operator Lufthansa (DE:LHAG) said late on Monday it was seeking to strike agreements with worker representatives by June 22 on how to make cuts equivalent to 22,000 full-time positions.
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Written By: Reuters
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