European stock futures rallied sharply following the announcement of a stimulus deal of 750bn euros to support the economies in the wake of coronavirus outspread.
The European countries agreed to raise money by collectively selling bonds, and handing out that money to member countries that are hardest hit by the pandemic.
Euro Stoxx 50 futures jumped 0.5% and German DAX futures grew 0.7% while British FTSE futures increased 0.4%. The European stocks reported gains on Monday amid positive coronavirus vaccine data and hopes for a deal.
“We did it! Europe is strong. Europe is united,” European Council President Charles Michel said at a press conference Tuesday. “This is a good deal, this is a strong deal, and most importantly, this is the right deal for Europe right now.”
The agreement has sent the stock market higher as it came after five days of deadlock.
“Europe has shown it is able to break new ground in a special situation. Exceptional situations require exceptional measures,” Ms. Merkel said in a news conference. ”A very special construct of 27 countries of different backgrounds is actually able to act together, and it has proven it.”
The deal would give significant support to hardest-hit countries like Spain and Italy that are also struggling with high unemployment numbers. The economics of these countries mostly depend on tourism, which is likely to take a longer time for recovery.
The European Commission has predicted that the EU economy is likely to shrink by 8.3% this year, with slower recovery in fiscal 2021.
What Does it Mean?
- European stocks soared sharply.
- Euro jumps against other currencies.
- US futures jumped on the European stimulus deal.
- Oil prices continue to trades above $40 a barrel.
- Asian markets rallied after the EU announced a deal.