Financial markets around the world have rallied strongly after the US government approved a new coronavirus treatment using the plasma of recovered patients, and as hopes rise for the development of a vaccine.
Against a backdrop of rising optimism that medical advances could help to sustain a stronger economic recovery from the pandemic, stocks in Europe climbed higher on Monday after gains in Asia overnight.
The FTSE 100 index of leading UK company shares rose by more than 100 points, about 1.9%, to trade above 6,100 after Donald Trump announced on Sunday that his administration would allow the use of convalescent plasma, a method that has been used to treat flu and measles, for Covid-19 patients.
Shares rallied across Europe after gains across the board in Asia, where Hong Kong’s Hang Seng index jumped 1.4%, Korea’s Kospi 200 gained 1% and China’s CSI 300 gained 0.8%.
Share prices have staged a dramatic recovery from one of the biggest stock market crashes in history at the onset of the pandemic, with large US technology firms fuelling a rebound on Wall Street to lift markets back to record highs.
However, the bounce-back comes despite the world economy sliding into the deepest slump since at least the 1930s Great Depression, owing to a collapse in activity during lockdown.
Britain has plunged into the deepest recession since modern records began, with gross domestic product falling by more than any other advanced economy in the three months to the end of June. However, growth is expected to rapidly recover in the third quarter, taking Britain from the bottom of the G7 grow league table to the top.
After a 20.4% decline in the second quarter, Oxford Economics forecasts growth of 15% in the three months to the end of September. However, the research consultancy said this was because the UK exited lockdown later than other countries, which had already recorded most of the benefit from the lifting of controls on business and social activity in the second quarter.
Andrew Goodwin, the chief UK economist at Oxford Economics, said: “The UK does indeed move from bottom to top. But this is largely a reflection of the depth and timing of the initial fall.”