(Reuters) - European shares closed higher on Friday, as President Donald Trump’s plans to reopen the U.S. economy, following similar steps announced in Europe, supported hopes of a resumption of activity after weeks of lockdown.
Investors also drew comfort from reports of a potential drug to treat COVID-19 made by U.S. drugmaker Gilead Sciences GILD.O.
The pan-European STOXX 600 index .STOXX was up 2.6%, staying positive for a second straight week, gaining in seven of the past eight sessions on tentative signs the pandemic was peaking in the worst hit parts of the continent.
All the major European sub-sectors were higher, with mining stocks .SXPP on track for their best day in more than three weeks, driven by higher commodity prices. [MET/L]
“President Trump coming out and saying the United States is probably going to open some of the country, it just seems like there’s sort of a step towards going back to normal,” said Sylvia Jablonski, strategist and managing director at Direxion in New York.
The benchmark STOXX 600 has recovered 24% since hitting an eight-year low in March, powered by a raft of global stimulus, but gains were subdued in the past week with economic data and quarterly earnings underlining the business impact of lockdown measures.
The economic landscape in two if the world’s biggest economies gave cause for concern. Data from China showed its worst economic contraction in almost three decades, while weekly U.S. jobless claims pushed the total for the past month above 20 million, yet there was no sign of weakness on Wall Street or in Asia. [MKTS/GLOB]
“Markets tend to beat the economy in terms of recovery, usually we’ll see the markets recover before we see the actual economy recover,” Direxion’s Jablonski said.
Jablonski expects a recovery in European economies by the end of 2020 and a return to growth in 2021. “I just think it’s a multi layered crisis,” he said.
Late on Thursday, Trump laid out guidelines to reopen U.S. states in a staggered, three-stage approach, but his plan was thin on detail and left decisions largely up to individual states.
It followed announcements on easing restrictions in Germany, Italy, Spain and some other parts of Europe.
Lifting the mood further on Friday, a report gave encouraging data from trials of Gilead Sciences’ experimental drug remdesivir in severe COVID-19 patients.
“If proven effective, remdesivir would be a game-changer in the COVID-19 pandemic fight, especially being a legacy drug that has been around for many years,” Jeffrey Halley, a market analyst at OANDA, said.
Airbus AIR.PA jumped 6.8% and was on course for its best day in three weeks as U.S. rival Boeing BA.N said it would resume commercial airplane production next week in Washington state after suspending operations last month.
The global aerospace industry has been hammered this year by the suspension of global travel, forcing large-scale production halts and mass furloughs. Airbus and Boeing have lost more than half their value since January.
Nokia NOKIA.HE rose 1.2% on a report it was working with an investment bank to defend itself from a hostile takeover.
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Reporting by Shreyashi Sanyal and Sagarika Jaisinghani in Bengaluru and Thyagaraju Adinarayan in London; editing by Patrick Graham, Arun Koyyur and Barbara Lewis
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