By Peter Nurse
Investing.com - European stock markets rose Thursday, as policymakers look to inject more stimulus to help the region’s battered economies as they gradually reopen.
At 4:25 AM ET (0725 GMT), the DAX in Germany traded 0.7% higher, France's CAC 40 rose 0.8%, while the U.K.'s FTSE index was up 0.7%.
The EU Commission announced its plan for a European recovery fund Wednesday, exceeding expectations as it offered up 250 billion euros in loans on top of the 500 billion in grants which were originally included in the German-Franco proposal last week.
If ratified by all, this would be a step towards mutualised debt as a major funding tool for the first time, paving the way for more coordination within the region.
The need for the additional recovery funding was laid bare by the Ifo Institute earlier Thursday, as it said in its latest update that the German economy, the region’s powerhouse, is likely to shrink by 6.6% this year as a consequence of the coronavirus crisis.
On average, businesses expected operations to return to normal in nine months after severe lockdowns in the second quarter, Ifo said. Under this scenario, the economy would shrink 12.4% in the second quarter of this year.
Meanwhile, countries throughout Europe are restarting their economies, with the United Kingdom, now the country with the most confirmed Covid-related deaths in the region, set to loosen its lockdown in June.
In corporate news, EasyJet (LON:EZJ) soared over 8% after the low-cost airline announced plans to cut up to 30% of its workforce. It also said winter bookings are ahead of year-earlier levels, but this reflects to a large degree people who have rebooked earlier flights that were cancelled due to the pandemic.
On the flip side, Rolls-Royce (LON:RR) dropped 4.7% as the engine-maker continues to struggle with the repercussions of the drop in airplane traffic due to the coronavirus outbreak.
Focus later Thursday will turn to the latest initial claims data in the U.S., with an additional 2.1 million people expected to have applied for unemployment benefits last week.
The Labor Department issues the claims numbers at 8:30 AM ET (12:30 GMT) as usual.
Oil prices headed lower Thursday, weighed by a surprise addition to crude stocks, according to API data late Wednesday, of 8.7 million barrels last week, compared with analysts' expectations for a draw of 1.9 million barrels.
The market will be looking to see if the U.S. Energy Information Administration’s release later Thursday confirms this figure.
At 4:25 AM ET, U.S. crude futures traded 3.3% lower at $31.73 a barrel. The international benchmark Brent contract fell 2.7% to $33.80.
Elsewhere, gold futures rose 0.5% to $1,719/oz, while EUR/USD traded at 1.1003, flat on the day.