© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt
By Ambar Warrick
(Reuters) – European shares hit a record high for the second straight session on Wednesday, as a drop in new coronavirus cases prompted buying in China-focused stocks, even as investors remained wary of the epidemic’s economic impact.
The pan-European STOXX 600 index () rose as much as 0.4% to a fresh peak of 430.29. A drop in new virus cases on Tuesday as well as optimism over China’s liquidity measures had seen gains in China-sensitive stocks.
“There is a risk-on-and-on-and-on sentiment at this moment… Markets have swallowed the coronavirus issue with ease and have just continued buying,” said Teeuwe Mevissen, senior market economist at Rabobank in Amsterdam.
“You would almost expect some kind of correction for stocks markets to be around the corner. I don’t see it continuing at this pace.”
China reported its lowest number of new infections since late-January on Wednesday, leading many to believe that the outbreak, which caused widespread disruptions in one of Europe’s biggest trading partners, could have peaked.
However, U.S. Federal Reserve Chair Jerome Powell warned that the virus outbreak may have some impact on the U.S. economy.
Basic resources () and automobile stocks (), which depend heavily on Chinese demand for their exports, rose about 1.4% and 2%, respectively.
The resources sector also took support from stronger iron ore and base metal prices, which rose on optimism over a resurgence in Chinese demand.
Among individual movers, Swedish casino software developer Evolution Gaming AG (ST:) topped the STOXX 600 with a 10% gain after its fourth-quarter revenue and core earnings surged.
Dutch bank ABN Amro (AS:) dropped to the bottom of the STOXX 600 after it clocked a weaker-than-expected fourth-quarter net income. Losses in the stock also weighed on the banks subindex ().
Markets were waiting for December data on European industrial production, which is likely to have slowed from the prior month, according to a Reuters poll.
Rabobank’s Mevissen said a drop in production was largely priced into markets, given the long-drawn decline seen in the sector over the past year.
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