European stocks jump, bond yields slide after Fed's emergency rate cut

[LONDON] European stocks extended gains and bond yields fell in a sharp risk-on trade after the US Federal Reserve cut interest rate on Tuesday by a half percentage point in an emergency move.

The Fed said it was cutting rate to a target range of 1.00 per cent to 1.25 per cent, saying "the coronavirus poses evolving risks to economic activity".

The pan-European STOXX 600 index jumped 3.2 per cent to day highs after the news, while German bond yields briefly fell with 10-year yields last up 3 bps on the day at -0.59 per cent.

Italian bond yields extended their falls, with 10-year yields last down 9 bps on the day at 1.06 per cent.

Britain's pound meanwhile rose further and was last up 0.6 per cent on the day at US$1.2825.

"We are seeing talk translating into action which is very welcome," Peter Kinsella, head of FX strategy at UBP. 

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

REUTERS