Global stocks were unsettled by renewed tensions between the US and China. Additionally, optimism about the relaxation of lockdowns across the US and Europe was tempered by new clusters of virus outbreaks in countries such as South Korea and China and central bank warnings of a protracted economic recovery.

Global stocks rallied, looking beyond dismal economic data, as Spain, Italy and India tentatively eased economic and social restrictions and let some businesses resume operations this week, while more US states began to lift lockdowns.

After strong gains in April, global stocks closed the week with relatively flat returns. Many European countries either gradually eased lockdown measures or announced plans to do so within the next two weeks as fatalities continued to fall steadily. While the number of US cases appeared to plateau, Brazil and Russia saw new infections rise sharply.

A Chinese trial of remdesivir, a drug made by Gilead Sciences that had been touted as a possible treatment for COVID-19, showed the treatment did not improve the condition of patients or reduce the pathogen’s presence in the bloodstream, according to draft documents published accidentally by the World Health Organisation. Global trade fell 2.6% in February compared with the same month the previous year, the fastest pace of decline since the financial crisis. Compared with January, global trade fell 1.5%, the second consecutive contraction this year as global trade volumes had already been slowing as a result of last year’s trade war between the US and China.

The IMF warned of the worst global economic outlook since the Great Depression, with output losses this year expected to far exceed those that followed the financial crisis of 2008.

The MSCI All Countries Index rallied 10% over a foreshortened week, its biggest weekly rise in almost 12 years. The number of COVID-19 daily fatalities continued to fall in Italy and Spain, with the latter starting to lift lockdown measures by allowing non-essential factories to re-open. Denmark, Austria and the Czech Republic also plan to relax social distancing measures. However, fatalities in the US and UK continued to increase: breaching 22,000 and 10,000 respectively.

Global equities lost initial gains to end the week slightly lower. In the first quarter of 2020, the MSCI All World index experienced the worst fall since the final quarter of 2008 with the global economy set for the sharpest setback since the Great Depression. There were signs that the lockdown measures in Spain and Italy were starting to work, with daily COVID-19 fatalities decreasing towards the end of the week. However, daily numbers continued to rise in the UK and US. More worryingly, Japan and Singapore saw the numbers of new cases start to rise.

Global stockmarkets rallied over the week, reassured by central bank pledges to do whatever it takes to help economies and by massive fiscal stimulus measures from governments. While Europe, particularly Italy, Spain and France, continued to see large numbers of daily fatalities, the epicentre of the virus crept west, with the US recording more than 100,000 confirmed cases. Bargain hunters were also in evidence as the S&P 500’s earnings yield minus the 10-year Treasury yield rose to its highest level since the eurozone debt crisis of 2012. However, a growing number of companies are cutting or cancelling their dividends and/or share buybacks to help protect their balance sheets against coronavirus disruption. In the UK, dividends have dropped by the largest amount since the 2008 financial crisis, while payouts from US companies are set to drop for the first time since 2009.

Global stockmarkets remained volatile, although the extraordinary supportive fiscal measures implemented by governments appeared to have halted the decline – at least temporarily. With most of Europe in lockdown, as well as one in five US citizens, Asia provided a rare ray of hope as China announced no new cases of COVID-19 for three days in a row. However, news of new clusters in South Korea unsettled investors.

The World Health Organization declared the coronavirus outbreak a pandemic, saying that Europe was now the “epicentre” of the crisis. While cases surged in Europe, the number of reported cases in China continued to drop, with more cases being imported from arrivals from outside of China compared to transmission within China. Global stockmarkets plunged, with most markets entering an official bear market (defined as a decline of at least 20% from a recent peak) after President Trump banned visitors from most European countries to the US. US and UK stock suffered their steepest daily falls since “Black Monday” in 1987, while European stocks saw the largest daily falls on record. Continued sharp falls in the oil price also added to global stocks’ woes. Unusually government bonds failed to provide a safe haven as stock markets tumbled, with yields rising over the week.