Global stock markets rallied amid signs that the spread of Covid-19 in virus hotspots may be slowing.
Investors seized on the recent decline in the death toll in Spain, the slowdown in the rate of infections in Italy and the fact that China, where the outbreak started, recorded no new fatalities for the first time.
These positive developments drove shares higher despite the Prime Minister Boris Johnson being in intensive care and Britain and France both recording their highest daily death tolls.
Raised hopes: Investors seized on the recent decline in the death toll in Spain, the slowdown in the rate of infections in Italy and the fact that China recorded no new fatalities for the first time
The FTSE 100 jumped by more than 3 per cent, with many blue-chip companies enjoying double-digit gains. Among the biggest risers yesterday were travel companies.
They have been hammered as members of the public have been ordered to stay at home and cancel their holidays.
Cruise operator Carnival topped the leader board, with shares jumping more than 22 per cent, followed by Easyjet, which rose more than 15 per cent.
Shares in Intercontinental Hotels Group rallied more than 9 per cent.
It means that the FTSE 100 has rebounded by about 14 per cent to 5704.45 points since slipping below 5000 points on March 23.
But investors are still nursing hefty losses after the index plunged by a quarter in value in the first three months of the year, which was the worst quarterly performance since 1987.
The FTSE 250, which is made up of smaller more UK-focused companies, increased by 5 per cent yesterday.
Following overnight gains in Asia, shares rebounded across Europe, jumping almost 4 per cent in Frankfurt and Madrid and just under 3 per cent in Paris.
Shares also rose on Wall Street, with the Dow, S&P 500 and Nasdaq all up more than 2 per cent in early trading.
Russ Mould, investment director at AJ Bell, said that the market has ‘see-sawed from hope to despair’.
He said: ‘Investors are reacting to indications that lockdown measures in the UK, US and Europe are beginning to flatten the curve of coronavirus infections and fatalities.’
But he added: ‘The market’s relief is only likely to last so long and attention will soon turn to how countries intend to exit the current containment measures which have, in effect, hit the pause button on the global economy.’
The rally on stock markets comes as a report published today predicts the Covid-19 pandemic will wipe £170billion off the annual profits of listed UK companies.
The analysis by Link Group added that firms ‘face this unprecedented challenge in an unusually weak state’.
It found that just 42 per cent of companies posted a rise in first-quarter profits before the Covid-19 lockdown – the lowest proportion since the financial crisis in 2009.
The report said: ‘The UK’s earnings recession has been getting longer, deeper and broader, even before Covid-19’s impact hit.’