European stocks edge up for the day, but mark worst quarter in 18 years

European stock markets ended higher after sporadic moves on Tuesday, clocking their worst quarter in nearly 18 years following a brutal sell-off on the heels of the coronavirus outbreak.

The pan-European STOXX 600 index closed up 1.7% for the day, having earlier sunk into negative territory before settling below intraday highs. Markets took some support from a drop in new cases in Italy, the worst hit country in Europe. For the quarter, the STOXX 600 lost 23%, or $2.8 trillion, with a bulk of losses happening over March, its worst month on record, as the rapid spread of the coronavirus and the subsequent measures to combat it all but decimated economic activity.

The outbreak also resulted in a much more volatile trading environment, with the regional volatility gauge hovering around levels last seen during the 2008 financial crisis. However, regional markets have been able to claw back some of their losses over recent sessions, although analysts remained sceptical of whether the gains would hold.

"These markets are still extremely volatile and will be susceptible to (today's) kind of reversals. I still fear this is just a rally in a bear market but I would love to be proven wrong," said Craig Erlam, senior market analyst, UK and EMEA at OANDA. For the day, energy stocks, which are among the worst hit by the rout, led gains. Still, they lost about a third of their value over the quarter, their worst ever.

Travel and leisure stocks also gained for the day, but underperformed their peers by a vast margin over the quarter, losing nearly 43%. Italian stocks added about 1% for the day, but marked their worst quarter ever, falling about 27%.

"It is too early to know whether the outbreak in Italy is truly under control. But even if that becomes more apparent, a sustained recovery in equity prices there and elsewhere probably won't happen until there is evidence that the pandemic is being contained at a global level," Simona Gambarini, markets economist at Capital Economics, wrote in a note. German stocks gained about 1%, but lost roughly a fourth of their value over the quarter.

Among individual movers, Nokian Tyres topped the STOXX 600, adding about 18% after Finland increased its stake in the tyre maker. HelloFresh jumped 13% to close at a record high after the German meal-kit delivery firm forecast first quarter revenue above market expectations.

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