Global stock markets on Friday surged to an 11% weekly gain – their second all-time record – after President Donald Trump announced plans to gradually reopen the U.S. economy affected by coronavirus at following similar movements elsewhere.
The bulls were in business. Additional information that patients with severe COVID-19 symptoms had responded positively to a drug made by the American company Gilead Sciences had helped Tokyo and Seoul to increase by 3% while Asia saw a much anticipated drop in data of Chinese GDP in stride.
Major European markets and Wall Street futures also advanced 3% in early European trade, pushing the pan-regional STOXX 600 up more than 7% for the week and the MSCI World Index to 49 countries of 10.5% already.
“The market continues to go through terrible data … on the anticipation of the reopening of economies,” said Steen Jakobsen, chief investment officer of Saxo Bank. “And hopes that a new drug regimen will help to remove longer-term uncertainty about the COVID-19 pandemic.”
Data from China showed that the world’s second largest economy was shrinking for the first time since at least 1992 due to the woes of the coronavirus.
Gross domestic product (GDP) contracted 6.8% year over year, slightly more than expected and 9.8% from the previous quarter.
Retail sales also fell more than expected in March, but industrial production fell only slightly, suggesting that its manufacturing sector is recovering at least faster.
Back in Europe, the Italian bond markets, which were under pressure as the difficulties linked to the virus pushed the debt / GDP ratio towards 150%, also recovered, with France expressing its support for the joint issuance of debt by the euro zone.
European countries have “no other choice” than to create a fund that “could issue a joint debt with a common guarantee,” French President Emmanuel Macron told the Financial Times on Thursday. Otherwise, the populists would win elections in Italy, Spain and perhaps France, he also warned.
Yields on ultra-secure 10-year US Treasuries and German Bunds edged up while Treasury and dollar futures firmed against the yen, another shy sign of investor optimism .
Spot gold also fell 1.5% to $ 1,692 an ounce and investors looking to take more risks in industrial metallic copper jumped 4% for the best week since February 2019.
No luck for the battered oil markets however. US crude futures fell 8% to an 18-year low after OPEC lowered its forecast for global demand on Thursday, and Brent crude fell less than $ 28 per barrel, up almost 3% at any given time.
OPEC is now seeing global demand contract by 6.9 million barrels per day (bpd) this year due to the coronavirus epidemic.
“Downside risks remain significant, suggesting the possibility of further adjustments, particularly in the second quarter,” OPEC said of demand forecasts.
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