A global stock market rally faded on Tuesday as investors awaited decisive action from governments and central banks designed to tackle the economic impact of coronavirus.
In Europe, the STOXX 600 index (^STOXX) briefly fell into the negative territory on Tuesday afternoon, undoing the day’s earlier momentum. The pan-European index had been up by around 3% earlier.
The sputtering trading session followed Monday’s market turmoil, when stocks — prompted by fears of spiralling economic consequences from the virus — suffered their worst single-day loss since the 2008 financial crisis.
Italy’s FTSE MIB Index (FTSEMIB.MI) fell by more than 3%, just hours after prime minister Giuseppe Conte extended emergency coronavirus measures across the country, forcing tens of millions of Italians indoors.
Italian economic development minister Stefano Patuanelli said on Tuesday that his government will approve measures worth around €10bn to tackle the economic impact of the measures.
Traders across the world now expect governments and central banks to spend hundreds of billions of dollars to stop the global economy spiralling into recession.
Analysts suggested the stock market bounce would be short-lived, pointing to the growing number of cases of coronavirus across Europe.
“The European markets completely erased their gains on Tuesday,” said Conor Campbell, a financial analyst at Spreadex.
“At the very start of the day investors seemed unsure whether to buy into the rebound, the European indices struggling to settle into a groove.”
There have now been well over 1,000 cases in each of France, Germany, and Spain. There have been around 300 cases each in Switzerland, the Netherlands, and the UK.
Markets in Asia finished out the session in the green.