European stocks retreat, as oil extends surge

Monitoring Desk

LONDON: European stock markets retreated Thursday following solid gains in Asia, while oil prices surged further, as extremely weak economic data offset news of a possible breakthrough in the search for a COVID-19 treatment.

The EU economy shrank 3.5 percent in the first quarter, official data showed, the first major indication of the devastation facing the bloc as a result of coronavirus. Separate figures revealed that the jobless total in Europe’s biggest economy Germany soared 13.2 percent in April.

“The ECB’s meeting will be in focus today, and dealers will looking to see if the central bank is wholeheartedly committed to assisting the eurozone in this time of huge uncertainty,” said David Madden, analyst at CMC Markets UK. “Last night, the Fed made it clear they are willing to do what it takes to overcome the crisis, so the standard has been set for the ECB.”

Official data showed the US economy contracted 4.8 percent in the first quarter, its worst performance in a decade.

The Fed, warning of worse to come, pledged to keep US interest rates at zero until the economy has weathered the crisis and is ready to resume growth.

Asian stock markets meanwhile jumped earlier Thursday, with top US epidemiologist Anthony Fauci saying that Gilead Science’s remdesivir drug “has a clear-cut, significant, positive effect in diminishing the time to recovery” from the coronavirus.

His comments fanned hopes that lockdowns — already being loosened in some nations — could be lifted more quickly, allowing people back to work to kickstart the battered economy.

“While a treatment is not a vaccine, a successful treatment would be a game-changer for the virus and would help facilitate a greater rollback of containment measures,” said National Australia Bank’s Tapas Strickland.

“It could also give consumers greater confidence to resume pre-pandemic activity.” (AFP/APP)