European stock markets rebound, oil extends losses

European stocks rallied Tuesday, one day after plummeting due to fears of a Covid outbreak in China and rising interest rates in the United States.

In late morning trading, London’s benchmark FTSE 100 index surged 0.9 percent overall, however, HSBC bank shares fell 3.6 percent on reports of lower first-quarter profits.

Frankfurt gained 1.2 percent and Paris gained 1.0 percent in lunchtime eurozone trade.

Elon Musk’s massive $44 billion (41 billion euro) agreed-upon purchase of Twitter also boosted global investor mood.

The euro fell to a two-year low against the dollar, boosted by its role as a safe haven amid the Ukraine crisis.

World oil prices nudged lower to extend recent losses on stubborn fears over weaker Chinese demand.

– ‘Relief rally’ –
“European markets are enjoying a modest relief rally… after Monday’s sharp sell-off, lifted by some positive momentum into the US close last night,” said Victoria Scholar, investment head at Interactive Investor.

As investors tried to rebound from Monday’s global sell-off, Asian indices differed, but concerns over China’s Covid lockdowns and the US Federal Reserve’s rate-hiking agenda lingered.

The Omicron flare-up in China has prompted officials to impose severe containment measures in the country’s major cities, cutting off millions of people and threatening to hit the world’s second-largest economy hard.

Hong Kong markets moved higher, but just a slight dent in the enormous losses experienced the day before, while Shanghai stocks extended their five-percentage-point losses.

After the People’s Bank of China pledged to boost growth and consumption, sentiment improved slightly.

China’s Covid measures have dealt a severe blow to its economy, leading to concerns about knock-on effects for the rest of the world — given its reliance on Chinese-made goods.

The China problem comes as traders contend with a hawkish Federal Reserve, which is fighting to keep inflation under control, which is at a more than 40-year high.

Policymakers at the US Federal Reserve have stated that they want to raise rates many times this year to keep a lid on inflation, with Fed Chairman Jerome Powell anticipating a half-point hike next month, followed by another before the end of the year.

Adding to the mix, the Ukraine conflict has wreaked havoc on the markets due to its impact on commodities prices and inflation.

After Twitter agreed to his massive takeover bid of $54.20 per share on Monday, Tesla tycoon Musk injected a note of optimism.

– Key figures at 1030 GMT –

London – FTSE 100: UP 0.9 percent at 7,443.68 points

Paris – CAC 40: UP 1.0 percent at 6,515.34

Frankfurt – DAX: UP 1.2 percent at 14,087.80

EURO STOXX 50: UP 1.0 percent at 3,796.04

Tokyo – Nikkei 225: UP 0.4 percent at 26,700.11 (close)

Hong Kong – Hang Seng Index: UP 0.3 percent at 19,934.71 (close)

Shanghai – Composite: DOWN 1.4 percent at 2,886.43 (close)

New York – Dow: UP 0.7 percent at 34,049.46 (close)

Brent North Sea crude: DOWN 0.2 percent at $102.17 per barrel

West Texas Intermediate: DOWN 0.4 percent at $98.17 per barrel

Euro/dollar: DOWN at $1.0681 from $1.0713 late on Monday

Pound/dollar: DOWN at $1.2713 from $1.2741

Euro/pound: DOWN at 84.04 pence from 84.08 pence

Dollar/yen: DOWN at 127.76 yen from 128.14 yen