European stocks headed firmly higher on Friday, alongside U.S. stock futures and oil prices, as investors appeared willing, for now, to put their faith in vast stimulus moves from central banks and governments to shore up economies against the fast-spreading coronavirus pandemic.
Up for a second-straight session, the Stoxx Europe 600 index SXXP, +3.65% climbed 4.4% to 300.72, and was set to barely gain for the week after a string of volatile sessions. The German DAX DAX, +4.81% and French CAC 40 PX1, +5.65% indexes gained over 5% each, respectively, and the FTSE 100 index UKX, +2.56% rose 3.2%.
Wall Street also looked set for a second positive session, with Dow Jones Industrial Average futures YMM20, +3.53% gaining 880 points, or 4.3%, to 20,722, with S&P 500 ESM20, +3.17% and Nasdaq-100 index NQ00, +4.57% futures up nearly 4% and 5% each, respectively. U.S. stocks saw gains on Thursday, but the Dow is still headed for its worst weekly stretch since October 2008.
Central banks and governments have speeded up efforts to cushion the economic blow already being seen by the coronavirus pandemic, which has ground many industries to a halt.
On Friday, the Bank of England suspended 2020 stress tests for the eight major U.K. banks and building societies, a day after cutting interest rates for the second time in a week. The BoE and European Central Bank have announced expanded asset-buying programs this week as well.
In the U.S., two of the Trump administration’s top economic officials expressed hope on Thursday that Congress could pass a vast economic recovery package by Monday. More moves were seen by the Federal Reserve, which extended dollar swap lines with central banks on Thursday.
The greenback has surged as investors have panicked into the currency, but that appeared to ease on Friday as the ICE Dollar Index DXY, -0.89% fell 1.2%, though it is still up 2.6% this week.
Analysts warned, though, that gains may not last and next week could see a renewal of volatile trading after what could be a weekend of difficult coronavirus headlines from Europe. Infection and death rates continue to climb in locked down countries such as Italy and Spain. Cases are also rising across the U.S., where California has just been placed on a statewide lockdown.
The “full extent of the economic damage remains unknown, yet markets tend to move ahead of the real world and will be pricing for 2021-22 already — global stocks will overshoot and bottom out well ahead of the real economy,” said Neil Wilson, chief market analyst for Markets.com.
“On the other hand, a drawdown of this scale usually takes months to play out. Picking a bottom is always the hardest part of trading,” he told clients in a note.
Also supporting markets, U.S. crude futures CLJ20, +6.58% shot up 6.2% to $27.54 a barrel. Dramatic moves this week have seen the contract give up 24% on Wednesday only to claw it all back on Thursday. Global benchmark May Brent crude BRNK20, +5.09% rose 5% to $30.04 a barrel, on the heels of a 14% gain on Thursday, but a 13% drop on Wednesday.
Oil gains came as Russia indicated it would like to see higher prices, and the Trump administration reportedly said it may intervene in oil-price war between Saudi Arabia and Russia. Heavily weighted oil companies responded to those gains, with BP BP, +5.52% BP, +6.09% up 7% and Royal Dutch Shell Group RDS.A, +11.19% RDS.B, +14.96% and Total TOT, -0.16% FP, +8.29% gaining 9% each.
Technology stocks were also driving positive action, with business software group SAP SAP, +2.75% SAP, -2.91% rising over 3% and semiconductor equipment maker ASML Holding ASML, +8.65% ASML, +7.39% up 8.6%. The tech-heavy Nasdaq Composite COMP, +2.30% led Wall Street’s gains on Thursday with a rise of 2.3%.