Stock markets have rallied despite latest evidence of the catastrophic impact coronavirus is having on the global economy – as central banks stepped in with more help.
London’s FTSE 100 closed 165 points, or nearly 3%, higher while on Wall Street the S&P 500 closed up 1.4%.
For the FTSE, it was the best week since 2009, with an upturn of 8% over the four days before the Easter weekend, while for the S&P it was the best since 1974 – up 12%.
That was despite figures showing one in ten American workers filed for jobless benefits in the last three weeks – and the IMF warning of the worst global downturn since the 1930s due to the impact of the pandemic.
Instead, investors turned their focus to a $ 2.3trn programme announced by the US Federal Reserve to offer struggling companies and local governments four-year loans.
In Britain, the Bank of England agreed to allow the Treasury a bigger overdraft to ensure it has enough cash to cope with the devastating impact of the coronavirus lockdown.
That impact became clearer as figures from the government showed 1.2 million people applying for universal credit in the last three weeks – while one forecast suggested UK GDP could shrink by as much as 25% in the second quarter.
Oil markets were also in focus as producer nations hammered out a deal to slash output in response to a steep fall in demand – after a protracted squabble between Saudi Arabia and Russia had put an agreement on hold.
That helped lift the price of Brent crude as much as 10% higher before giving up its gains on fears that the deal would not go far enough.
In Washington, the head of the International Monetary Fund said the coronavirus pandemic sweeping the world would turn global economic growth “sharply negative” in 2020, triggering the worst fall-out since the Great Depression – and only a partial recovery in 2021.
IMF managing director Kristalina Georgieva noted that while governments had already undertaken fiscal stimulus measures of $ 8trn, more was likely to be needed.
Fears about the economic impact of the crisis have battered global share values, sending Wall Street stocks down by about a third from mid-February to late March.
In the last few weeks though, promises of help from central banks and governments around the world have started to lift sentiment, sending the market back up more than 20%.
Some investors have even begun to look ahead to the prospect of lockdowns being lifted and hopes that the number of cases may be about the peak in many of the worst hit parts of the world.
However, many remain sceptical given the continued uncertainty.
Quincy Krosby, chief market strategist at Prudential Financial, said: “You typically have very strong rebounds, even in a bear market.
“The question is whether or not we see selling into this rebound, or can we continue to build on it?”
Michael Hewson, analyst at CMC Markets, said: “All of this extra stimulus has helped overshadow the fact that there is little likelihood in the short term that the current lockdown measures will be lifted.”