European stock markets reported hefty gains after making big losses early this week as traders sentiments shifted towards stimulus program. In addition, the robust growth in oil prices helped the energy sector to lead the gains. Oil prices jumped on slowing supplies.
The pan-European Stoxx 600 rose 0.9%, driven by a 1.8% gain in oil and gas shares. The European stock markets are following the Wall Street trend.
Wall Street reported hefty gains since Wednesday as President Trump announced a new relief package for the struggling airline industry. The president also said he wants to give $1200 to each American to help them in getting out of the worst economic situation.
“With coronavirus cases that keep rising at a fast pace, and the U.S. elections getting closer, we are reluctant to call for a long-lasting recovery. For now, hopes for partial, stand-alone, stimulative bills in the U.S. may keep investor morale supported for a while more,” said Charalambos Pissouros, senior market analyst at JFD Group.
Although, the reports of the fourth consecutive month of increase in German exports added to the European stock market rally, the pace of growth slowed sharply.
German exports rose 2.4% in August from a 4.7% growth in July, according to the Federal Statistics Office. Some analysts are pointing stronger euro and increasing virus infections for slowing export growth.
Oil prices soared more than 3% on Thursday amid the shutdown in over 90% of the Gulf of Mexico’s crude output due to Hurricane.
The reports of OPEC’s strategy of keeping the output at the current level contribute to oil price gains. US oil price jumped to $42 a barrel level while Brent oil grew to $43 a barrel. Analysts say supplies related problems along with OPEC’s reluctance to increase supplies are the biggest catalysts for oil prices.
The “problems on the supply side can no longer be ignored,” said Carsten Fritsch, an analyst at Commerzbank, in a note.