Investing.com – European stock markets pushed sharply higher, helped by the U.S. Federal Reserve’s latest attempt to calm the markets and the expectation of similar help by its European counterpart.
The Federal Reserve announced Monday a sweeping extension of its plans to backstop businesses and consumers by increasing its asset purchases by any volume necessary. This followed the inability of Congress – for a second day – to agree on a $1 trillion-plus economic support package drafted by Senate Republicans.
At the same time, the European Central Bank intends to be a major buyer of commercial paper when it enters that market this week, ECB policymaker Francois Villeroy de Galhau said in an interview with French website Wansquare.
The ECB’s latest package of crisis measures opens the way for it to buy debt of less than six months for the first time down to debt as short as one month.
Central banks have had to be aggressive with their policy measures as the latest economic releases paint a grim picture about the damage being inflicted by the coronavirus pandemic.
Activity surveys for March from Australia and Japan showed record falls earlier Tuesday, and surveys in Europe and the United States are expected to be just as weak.
Purchasing Managers’ Index surveys from Japan for March showed the services sector shrinking at its fastest pace on record and factory activity contracting at its quickest in a decade. In Australia, the CBA Services PMI fell to a record low.
Later on Tuesday, the eurozone composite PMI is expected to come in at the lowest since early 2009, at 5:00 AM ET (0900 GMT), as the German data has done, while U.S. manufacturing and services PMIs are also expected at multi-year lows, at 9:45 AM ET.
In corporate news, Norwegian Air (OL:NWC) has fulfilled the first condition for taking part in a government-led rescue package for the airline industry, securing an initial cash infusion of 300 million Norwegian crowns ($26.63 million). Its shares climbed over 19%.
Norway said earlier this month Norwegian Air could obtain credit guarantees worth up to 3 billion crowns to help weather the coronavirus crisis, but the airline must first meet a series of conditions.
Oil rallied Tuesday amid speculation of an alliance between the U.S. and Saudi Arabia, the two largest producers in the world, to stabilize prices, prompted by comments from U.S. Energy Secretary Dan Brouillette.
“At some point we will engage in a diplomatic effort down the road. But no decisions have been made on anything of that nature,” said Brouillette Monday.