European shares rebounded on Monday as a slowdown in coronavirus deaths raised hopes that nationwide lockdowns were starting to show results, while Rolls Royce soared after becoming the latest multinational firm to raise cash to weather an economic slump.
The British aero-engine maker (RR.L) jumped 15.4% after losing more than half its value this year, as it secured an extra 1.5 billion pounds ($1.8 billion) in reserves, even though it suspended its dividend for the first time since 1987.
The benchmark STOXX 600 index was up 2.7%, after ending Friday with its sixth weekly decline in seven as the health crisis stalled business activity, raising the threat of mass layoffs and corporate defaults.
Italian .FTMIB and French .FCHI bourses jumped 3.1% and 3.3%, respectively, as data showed Italy reported its lowest daily death toll in more than two weeks on Sunday, while France’s death toll dropped and admissions into intensive care slowed.
“Signs of a slowdown in the epidemic in Europe have certainly been more stable, although we still have a very high number of cases,” said Simona Gambarini, markets economist at Capital Economics.
“It’s still early to say whether this is really a turning point because there might be a sense that there has been a slowdown, but then there is a flare up later on.”
The STOXX 600 index has lost more than $3 trillion in market value since February on fears of a global recession as entire sectors teetered on the brink of collapse, prompting companies to suspend dividends and share buybacks to shore up cash.
Norwegian Air (NWC.OL) fell 5.2% after saying its passenger volume plunged 60% year-on-year in March as a virtual halt in business and holiday travel forced airlines to ground their fleet.
Analysts now expect a European earnings recession to deepen this year despite extraordinary fiscal and monetary stimulus globally, as lockdowns remain in place to curb the spread of the coronavirus.
“To successfully re-open economies without fear of subsequent mini shutdowns, we will need the antibody test rolled out so that a certain part of the population can work through regardless of the state of the viral spread,” said Jim Reid, strategist at Deutsche Bank.
“That will be the real breakthrough until we get a vaccine.”
Gains for UK’s FTSE 100 .FTSE were capped by reports that British Prime Minister Boris Johnson was in the hospital due to persistent coronavirus symptoms, 10 days after testing positive.
Peugeot-owner PSA (PEUP.PA) jumped 6.7% after announcing a further 3 billion euros ($3.3 billion) worth of loans on top of existing reserves of the same amount.
Finnish department store owner Stockmann (STCBV.HE) plunged 32.5% after saying it had decided to file for a corporate restructuring due to the drop in customer volumes caused by the coronavirus outbreak.