European stocks rallied as markets opened on Wednesday, as a coronavirus treatment “breakthrough” outweighed new fears of a second wave.
The World Health Organization (WHO) called a clinical trial led by Oxford University “great news.” It said the study was the first treatment shown to reduce the number of deaths among severely ill patients reliant on ventilators.
WHO director-general Adhanom Ghebreyesus said the trial, using the cheap, widely used steroid dexamethasone, marked a “lifesaving scientific breakthrough.”
It continued a global market rally on Tuesday after US retail sales leapt by a record 17.7% in May, making up more than half their losses in the past two months. The Federal Reserve’s announcement of fresh plans to backstop the US corporate debt market had also lifted stocks.
“Stocks are in recovery mode as investors are energised by the prospect of further stimulus, a rebound in US retail sales and on hopes of a ‘major breakthrough’ treatment for serious cases of coronavirus,” said Neil Wilson, chief market analyst at Markets.com.
“The Fed’s decision to buy individual corporate bonds and hopes the White House will swing a $1tn infrastructure package continue to help lift the boats.”
But fears of a resurgence of the pandemic had capped gains in Asian overnight, and sent the Nikkei (^N225) down 0.5%. China’s Shanghai Composite index (000001.SS) closed 0.2% higher and the Hong Kong Hang Seng Index (^HSI) rose 0.3%.
It came as Chinese authorities imposed a fresh lockdown in Beijing and six US states reported a record rise in new infections.
"A serious second wave of cases in major developed countries is the biggest risk facing equity markets," said Shane Oliver, head of investment strategy at fund manager AMP Capital, according to Reuters.
Fresh tensions between Indian and China and between North and South Korea are also being closely watched by investors.