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James Hyerczyk

European shares climbed for a second straight session on Friday, helped by a wave of fiscal and monetary stimulus, that indicated governments and central banks would do “whatever it takes” to soothe the economic hit from the coronavirus pandemic.

At 12:09 GMT on Friday, the U.K.’s FTSE 100 index is trading 5243.05, up 91.44 or +1.77%. Germany’s DAX Index is at 8993.08, up 382.65 or +4.44% and France’s CAC 40 Index is at 4061.47, up 205.97 or +5.34%.

Coordinated Effort by Central Banks

Earlier in the week, the Bank of England (BOE) because the latest central bank to launch a substantial bond-buying program and issue further emergency cuts to interest rates, following similar moves by the European Central Bank (ECB), the U.S. Federal Reserve (FED) and the Bank of Japan (BOJ), while governments across major economies have begun to open the fiscal taps.


Bank of England Cuts Rates Again and Ramps Up Bond Buying

The BOE cut interest rates to 0.1% and ratcheted up its bond-buying program Thursday, in an effort to offset the economic impact of the coronavirus outbreak.

At an emergency meeting, the central bank’s monetary policy committee voted unanimously to lower borrowing costs by 15 basis points and to increase the BOE’s bond-buying program to 645 billion British Pounds ($742 billion), up 200 billion British Pounds.

European Central Bank Launches $820 Billion Coronavirus Package

The ECB on Wednesday evening announced a 750 billion Euro ($820 billion) asset purchase program in an effort to help mitigate the impact of the coronavirus outbreak, as the death toll in Europe continues to rise.

The central bank said that it would buy public and private securities to counter the “serious risks” of the coronavirus. The so-called Pandemic Emergency Purchase Program (PEPP) will last until the end of the year.

“Extraordinary times require extraordinary action. There are no limits to our commitment to the Euro. We are determined to use the full potential of our tools, within our mandate,” ECB President Christine Lagarde said Wednesday on Twitter.

Corporate News

Airlines continue to be devastated by falling demand amid the pandemic and associated border shutdowns. German carrier Lufthansa has grounded most of its fleet, and on Thursday warned that the industry may not survive the pandemic without government bailouts.

Sector News

Travel and leisure stocks jumped 7.6% in a surprise move, leading gains among the major European subsectors, while energy firms added 7.3% on the back of a recovery in oil prices. Bank stocks jumped 4.2% from their lowest levels in three decades after the UK’s central bank joined its European peers in suspending stress tests for 2020.  Crude oil posted its best day ever on Thursday, only a day after its third-worst drop in history.

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