World stock markets staged a decent rally last week with major indices bolstered by huge financial stimulus packages. Most pertinently, a deal has been reached between President Trump’s administration and Congress on a $2trn fiscal support deal, equivalent to just under 10% of GDP, dwarfing the global financial crisis plan, which amounted to around $800bn.

Global equities, measured by the MSCI All-Country World Index, rose 12.9%, and included the best three-day gain for the S&P 500 since 1933. The S&P 500 ended the week up 10.3%, the Euro Stoxx 50 up 7.1%, and even emerging markets up 6%.

UK investors embraced the rally with gusto, sending the benchmark FTSE 100 index up 6.2%, while even the more domestically-focused FTSE 250 gained 8.7%. Markets started this week on a more stable footing.

Sentiment was aided by US healthcare group Johnson & Johnson saying it had identified a lead vaccine candidate for the coronavirus. The company noted that human testing on the potential vaccine will begin in September, and while that may seem like a long way off, the news pushed up J&J’s shares by 8%. Italy also reported its lowest number of new coronavirus cases in almost two weeks which is seen as another positive sign.

‘All in all, the pandemic still looks to be on a runaway path, though there are some signs that some of the European hotspots are cooling very slightly,’ said Robert Carnell, Asia-Pacific research chief at investment bank ING.

Dividend cuts continue to dominate market news in the UK, a major worry for income-seeking investors. So far 13% of FTSE 100 companies have now axed dividends after ad agency WPP (WPP) and engineer Smiths (SMIN) added their names to the lengthening list earlier in the week.

There are many more companies pulling dividends down the market value ladder, including AA (AA.), IMI (IMI), Morgan Advanced Materials (MGAM) and Oxford Instruments (OXIG) this week.

But while property firm Hammerson (HMSO) warned of a rent strike and EasyJet (EZJ) and BA-owner International Consolidated Airlines (IAG) grounded aircraft, it is far from complete doom and gloom.

Earlier in the week tobacco giant Imperial Brands (IMB) rallied more than 14% after it secured a new €3.5bn credit facility and said it had experienced no material impact on its performance from the coronavirus outbreak. Investors were also cheered by news that pizza delivery chain Domino’s Pizza (DOM) had hired former Costa Coffee head Dominic Paul as its new chief executive.

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