(Reuters) – German shares jumped 5.8% on Monday to lead a strong bounce in European shares as a slowdown in coronavirus deaths raised hopes that nationwide lockdowns may gradually be eased.
While all major sectors were well in the black, the travel and leisure sector <.SXTP> — worst hit by the lockdowns — rallied 8.2% breaking a three-day losing streak, while the German-focused auto sector <.SXAP> led gains with its near 9.5% jump.
Frankfurt’s DAX <.GDAXI> marked its best session in two weeks, while all other major European bourses closed up between 2.3% and 4.9%.
Italy, which has the highest coronavirus death tally in the world, reported its lowest daily death toll in more than two weeks, while in Spain, the pace of new deaths slowed for the fourth day. France’s daily death toll also dropped and admissions into intensive care slowed.
Wall Street stock indexes got a boost after President Donald Trump expressed hope that the health crisis was “leveling-off” in some of the hardest-hit U.S. states. [.N]
“Signs that coronavirus may be peaking in parts of mainland Europe have given some hope that the economic hit will be short-lived,” said Russ Mould, investment director at AJ Bell.
The volatility gauge for euro-zone stocks <.V2TX>, widely known as Europe’s fear index, dropped to a one month low of 42.92, nearly halving from its peak of 95.02 in mid-March.
“There still remains a great deal of uncertainty as to how soon, and to what extent, the lockdowns will be relaxed,” warned Rupert Thompson, chief investment officer at wealth management group Kingswood.
“While we remain cautious near term, we continue to believe that equity markets in a year’s time should be higher than now, possibly significantly so,” he added.
The pan-European benchmark STOXX 600 index <.STOXX> also posted its biggest one-day gain in two weeks, ending 3.7% higher. It had logged its sixth weekly decline in seven last week as the health crisis stalled business activity and prompted firms to suspend dividends and share buybacks.
The STOXX 600 index has lost more than $3 trillion in market value since February on fears of a global recession despite extraordinary fiscal and monetary stimulus globally, with Goldman Sachs predicting a 38.4% slump in euro area real GDP in the second quarter.
Ladbrokes owner GVC <GVC.L> surged almost 18% to top the regional and travel index after it halved its estimate for a monthly hit to profits from the coronavirus-driven shutdown in international sports.
But gains for UK’s FTSE 100 <.FTSE> were capped by oil firm BP PLC <BP.L> as a delay in an OPEC+ meeting regarding oil output pressured crude prices.
News that British Prime Minister Boris Johnson was in hospital due to persistent COVID-19 symptoms also weighed.
(Reporting by Sagarika Jaisinghani in Bengaluru, Editing Arun Koyyur and Keith Weir)