(Reuters) - UK shares jumped on Wednesday as encouraging news on a potential COVID-19 treatment and a surge in shares of lenders Barclays and Standard Chartered following results added to a strong rally in equities this month.
UK shares are on course to end April with solid gains, recouping more than a third of the losses since the market rout began in February as the coronavirus crisis spread.
Hope is returning, boosting appetite for risky assets, as countries report falling infection rates and begin to ease restrictions amidst encouraging news for an experimental COVID-19 treatment.
U.S. drugmaker Gilead Sciences (GILD.O) said its experimental antiviral drug remdesivir helped improve outcomes for COVID-19 patients in a clinical trial.
That set off a rally in the UK’s cyclical sectors such as banks, oil and gas companies, miners and travel stocks - which have sharply underperformed during the viral pandemic.
The news helped investors look past data that showed the U.S. economy, the world’s biggest, recorded its sharpest contraction in the first quarter since the 2008 financial crisis.
“We’ve seen the story play out a bunch of times in the past few weeks. The markets are just ignoring short-term economic data,” said Guy Lebas at Janney Montgomery Scott in Philadelphia. “The duration of the downturn matters more than the depth of the downturn.”
In earnings-driven news, Barclays Plc (BARC.L) jumped 13% as a stellar performance from its investment bank helped soften a blow to the bank’s profits due to a surge in bad debt provision.
Asia-focused Standard Chartered PLC (STAN.L) soared 12% as it expects its main markets to lead a global recovery from the health crisis even as increased bad loan provisions squashed quarterly profit.
Oil majors BP Plc (BP.L) and Royal Dutch Shell RDSa.l rose more than 3% after crude prices rebounded on smaller-than- feared build in U.S. stockpiles. [O/R]
Among midcap stocks, electricals retailer Dixons Carphone (DC.L) jumped 18.2% after it said strong online demand had made up for around two-thirds of store sales lost due to the lockdown.
Battered travel stocks also gained with cruise operator Carnival Plc (CCL.L) jumping 16.5% to the top of FTSE 100.
Shares in British Airways owner IAG (ICAG.L) gained 5.7% as it unveiled plans to axe up to 12,000 jobs to survive what is expected to be aviation’s worst downturn without a state bailout.
Reporting by Devik Jain, Sagarika Jaisinghani and Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila and Mark Heinrich