FTSE 100 jumps as Gilead reports positive data on coronavirus drug trial
The FTSE 100 closed at its highest in seven weeks after drugmaker Gilead reported positive results from its trials for a coronavirus drug.
The blue-chip FTSE 100 index rose 2.13 per cent higher to finish at 6,085 points, the first time it has surpassed the 6,000 mark since 11 March.
Read more: FTSE 100 jumps as investors look past dire results to economies reopening
Gilead said it was aware of positive data emerging from the National Institute of Allergy and Infectious Diseases’ study of its antiviral drug remdesivir.
Neil Wilson, chief market analyst at Markets.com, said investors had welcomed the news. “The closer you get to treatment or a vaccine the quicker we reopen the economy and the lower the risk of a second, third wave outbreaks.”
US economy shrinks at fastest pace since financial crisis
This came despite worse than anticipated first-quarter GDP figures in the US. US GDP shrank at its fastest rate since the financial crisis at an annualised rate of 4.8 per cent. Analysts had expected a contraction of four per cent.
Given the figures only capture two weeks of the lockdown measures, analysts predict second-quarter figures will be much worse.
Chris Beauchamp, chief market analyst at IG, said: “This is a market that ignores or rides out bad news and focuses on the good data, no matter how limited that might be.” Investors had anticipated dire GDP figures for the first quarter, and indeed that the second quarter would be worse.
“How much worse will not be clear for a while, but given the market has rebounded from its steep decline things will need to be much worse for a real retest of the March lows to get underway,” Beauchamp adds.
Investors looked past the bad news as the Dow Jones opened two per cent higher, while the S&P 500 rose 2.5 per cent.
Oil helps FTSE 100 reach seven-week peak
The FTSE 100 hit a seven-week peak in part due to oil prices bouncing back somewhat. Brent crude is up around five per cent and back to $21.50 per barrel.
The rise in prices gave the energy sector a lift and bolstered stocks. BP closed up 3.9 per cent while Shell rose four per cent.
Russ Mould, investment director at AJ Bell, said a positive reaction to Barclays’ results this morning also helped lift the FTSE 100 higher. Shares are up nearly 14 per cent despite reporting a £600m drop in profit for the first quarter.
“Although Barclays has attracted flak for its commitment to investment banking, this part of the business is actually performing well at a time when the retail bank is facing a significant increase in bad debts,” he said.
Investors also welcomed Standard Chartered pointing to “encouraging early signs” of recovery in China. The lender is trading up 7.5 per cent.
Easing of lockdown measures quell nerves
Market sentiment in Europe has stabilised in recent days. Germany’s Dax jumped 2.5 per cent to close at 11,060 points, while France’s Cac rose two per cent.
Joshua Mahoney, senior market analyst at IG, said: “The recent upside seen in European and US stocks appears to be a combination of optimism over easing lockdown restrictions, coupled with the ever-present influence of huge global stimulus packages.”
Last night, France outlined plans to ease lockdown measures, with children returning to school and many shops reopening. Italy has also announced a number of measures will be lifted after seven weeks on lockdown.
However, economic questions remain until a vaccine is found, said Mahoney. “Easing lockdown measures is unlikely to bring back complete normality thanks to the virus that continues to influence decisions on both the business and consumer level,” he added.