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Investing.com — Europe’s stock markets are ending the week on a strong note after European Central Bank President Christine Lagarde said that the worst of the pandemic is over.
“We probably are past the lowest point and I say that with some trepidation, because of course there could be a severe second wave,” Lagarde told an online event.
That view underlines one of the major reasons why, for once, Europe may be set for a spell of outperformance vis-à-vis the U.S. market: its success in bringing the coronavirus under control.
According to data from the European Center for Disease Control, infection rates have stabilized at low levels in Europe this month, despite a general relaxation of the lockdown measures that were imposed in March and April. Isolated outbreaks – such as the one in German meat-packing plants that led to a fresh lockdown in the Guetersloh district of North Rhine-Westphalia – have been just that: isolated.
That’s not to say that the continent’s success has been uniform. The U.K. and, especially, Sweden are paying the price for earlier misjudgments in their policy response. And scenes from Britain’s beaches on Thursday – with massive crowds and no sign of social distancing, will certainly stoke fears that the U.K. could experience the same fate as the U.S. since Memorial Day.
But the U.K. is still confident (or desperate) enough to have ordered the reopening of most service-sector entities this week, and on Friday abandoned its plans for a sweeping quarantine of all visitors from abroad, a plan that had drawn outrage and threats of legal action from the beleaguered travel sector.
The FTSE 100 was the best performer of the major indices on Friday, rising 1.4%, while the Stoxx 600 rose 0.9% and the German DAX rose 0.7%. U.K. tourism-sensitive stocks were among the biggest gainers: IAG (LON:ICAG), the owner of British Airways, rose 3.5%, while EasyJet, fresh from its capital raising exercise earlier this week, rose 3.3%.
That’s not enough to stop most European markets being down on the week, however: a result of the drag on world markets caused by the surge in new Covid-19 infections in the U.S. Lagarde, ominously, warned that the rebound would be “uneven”, “incomplete” and “transformational”, meaning some companies in industries such as air travel and entertainment would never recover although others would come out stronger.
