London — World stock markets made a super-charged sprint towards an 11% weekly gain on Friday — their second best of all time — after US President Donald Trump laid out plans to gradually restart the coronavirus-hit US economy following similar moves elsewhere.
The bulls were in business. Additional reports that patients with severe Covid-19 symptoms had responded positively to a drug made by US company Gilead Sciences had helped Tokyo and Seoul both surge 3% as Asia took a widely-expected slump in Chinese GDP data in its stride.
Europe’s main markets and Wall Street futures made 3% gains in early European trading too, putting the pan-regional Stoxx 600 up more than 7% for the week and MSCI’s 49-country world index up 10.5% already.
“The market continues to look through terrible data … on anticipation of economies re-opening,” said Steen Jakobsen, chief investment officer at Saxo Bank. “And hopes that a new drug treatment will help lift longer term uncertainty about the Covid-19 pandemic.”
The data from China had showed the world’s second-largest economy shrank for the first time since at least 1992 because of the coronavirus pandemic.
GDP contracted 6.8% in the quarter, year on year, slightly more than expected, and 9.8% from the previous quarter. Retail sales also fell more than expected in March, but industrial output dipped only slightly, suggesting its manufacturing sector at least is recovering more quickly.
Back in Europe, Italian bond markets, which have been under pressure as the country’s virus difficulties push its debt-to-GDP ratio towards 150%, also rallied as France expressed support for joint eurozone debt issuance.
European countries have “no choice” but to set up a fund that “could issue common debt with a common guarantee”, French President Emmanuel Macron told the Financial Times on Thursday. Failure to do so would lead to populists winning elections in Italy, Spain, and possibly France, he also warned.
Yields on ultra-safe 10-year US treasuries and German bunds rose slightly, while treasury futures and the dollar firmed against the yen, in another tentative sign of investor optimism.
Spot gold fell 1.5% to $1,692 per ounce, too, and with investors looking to take on more risk, industrial metal copper jumped 4%, on track for its best week since February 2019.
No such luck for battered oil markets, however. US crude futures slumped 8% to an 18-year low after oil cartel Opec had lowered its global demand forecast on Thursday, and Brent crude slipped back to less than $28 a barrel having been up nearly 3% at one point.
Opec now sees a contraction of global demand of 6.9-million barrels per day (bpd) this year due to pandemic, saying, of the demand forecast, “Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter.”