Global stock markets surged on Friday as hopes of a US miracle cure for coronavirus and a potential end to the lockdown in America and Europe boosted sentiment.
The FTSE 100 rose 3% as shares across the world ended the week on a high note. Investors were buoyed after a University of Chicago Medicine study into a drug made by California biotech firm Gilead Sciences showed positive results in a clinical trial.
Gilead’s stock was predicted to rocket 14% on reports the drug, remdesivir, had helped almost all of more than 100 severely ill patients recover rapidly.
Markets were also cheered by signs that US president Donald Trump is ready to begin reopening the world’s largest economy in the face of mass unemployment.
He gave state governors guidelines for a phased reopening under his “Opening Up America Again” plan. Figures yesterday showed 22 million Americans have applied for unemployment benefits in the past four weeks.
Markets across Asia and Europe surged with some of the biggest gains being airlines such as easyJet and British Airways owner IAG. Suppliers to the aviation sector, Rolls-Royce and GKN owner Melrose were the biggest risers.
The optimistic mood came despite gloomy economic data from China, the source of the virus outbreak. Chinese first quarter GDP fell 6.8%, down from 6% growth in the final quarter of 2019 and the first contraction since the end of the Cultural Revolution in 1976.
The result was worse than the 6.5% forecast by economists and a warning shot to Western economies still trying to estimate the impact of widespread lockdowns. China also revised up the death toll from the outbreak’s epicentre in Wuhan by 50% to 3869.
Jasper Lawler, head of research at online trading platform London Capital Group, said: “Markets are acting like that’s a hiccup and that the longer-term growth trajectory is intact. The dynamic is still bullish in markets because bad news is being cast away as priced in and good news is justification for further recovery.”
However, Alastair Neame, senior economist at economics consultancy CEBR was less upbeat: “While there are some encouraging signs of life as the restrictions have lifted – weak consumption and the spread of lockdown restrictions to so many major economies mean the prospect of a swift recovery has waned.”
