(Bloomberg) -- European stocks jumped, extending their biggest monthly gain since July 2009, on optimism about a drug to fight the novel coronavirus.
The Stoxx Europe 600 Index climbed 1.8% at the close, rising sharply in afternoon trading after Gilead Sciences Inc. said an experimental treatment for Covid-19 met the main goal in a clinical trial. The U.K.'s FTSE 100 Index advanced, up 22% from a March low and entering a bull market, albeit later than benchmarks in Europe and the U.S.
European stocks have risen to a seven-week high, also helped by stimulus measures and hopes of lockdowns being eased. Traders are awaiting the Federal Reserve's rate decision after the market close today, and the European Central Bank tomorrow.
“This Gilead trial is actually the best-case scenario, hugely positive and the market should be up a lot,” said Richard Tan, a director at PanAgora Asset Management in Boston, who leads the stock selector equity team. “Just yesterday we were still tentative on whether the market might revisit March lows, but now we can probably say that we've seen the lows in the market.”
Investors looked past data showing the U.S. economy shrank in the first quarter by the most since 2008. All industry groups in the Stoxx 600 advanced except health-care shares, which were dragged lower by poor earnings from hearing-aid maker GN Store Nord A/S. Banks and travel and leisure shares led gains.
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The Stoxx 600 is up 8.4% in April, with all 19 industry groups advancing. Carmakers and travel and leisure shares -- among the worst hit in the preceding sell-off -- have led gains, while energy shares have lagged. The benchmark remains 17% lower for the year.
Corporate results were also in focus on Wednesday. Carmakers outperformed after earnings updates from Daimler AG and Volkswagen AG. Barclays Plc climbed 13% after its trading revenue beat peers.
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