S&index futures reversed earlier losses as the U.S. House of Representatives passed a $484 billion coronavirus aid package, while China’s central bank cut another policy rate as expected. Sentiment was helped after US Covid-19 infections rose at the slowest pace in three weeks, and the potential easing of lockdowns in Europe.

Europe did not share US enthusiasm and the Stoxx 600 dropped after the region’s leaders failed to agree on a long-term stimulus package and news the Remdesivir coronavirus drug was a flop. Food and beverages was the only gaining industry group to advance after food giant Nestle reported its fastest sales growth since 2015 as consumers loaded up on frozen food. Travel, oil and bank shares led the decline. The banking index led the declines in European stocks after S&P cut Commerzbank’s credit rating by a notch and lowered its outlook for Deutsche Bank to negative from stable.

German’s Ifo Business Climate index plunged in April to 74.3, below the 79.7 expected and down sharply from prev 85.9 previously. The Ifo Expectation print came in at an apocalyptic 69.4 (exp 75.0; R prev 79.5), while the Current Assessment was a bit stronger at Apr: 79.5 (exp 80.5; R prev 92.9).

“It’s a negative session,” said François Savary, chief investment officer at Swiss wealth manager Prime Partners. “The market for the last week has been under consolidation after a strong rally. A lot of good news has already been priced in and news that the number of deaths had increased in the U.S. was also a warning sign for investors.”

In the latest European failure to resolve the coronacrisis, EU leaders agreed on Thursday to build a trillion euro emergency fund to help recover from the coronavirus pandemic, while leaving divisive details until the summer. French President Emmanuel Macron said differences continued between EU governments over whether the fund should be transferring grant money, or simply making loans.

“The risk exists that a concrete decision on the creation of the recovery fund may not occur before September, thereby not being operational before early 2021,” Goldman Sachs European economist Alain Durre wrote in a note.

Earlier in the session, Asian stocks also fell, led by IT and industrials, after rising in the last session. Most markets in the region were down, with Jakarta Composite dropping 2.1% and South Korea’s Kospi Index falling 1.3%, while Australia’s S&P/ASX 200 gained 0.5%. The Topix declined 0.3%, with Legs and Meiji Shipping falling the most. The Shanghai Composite Index retreated 1.1%, with Jumpcan Pharma and Jiangsu Jiangnan High Polymer Fiber posting the biggest slides. There was limited reaction to the Chinese central bank’s partial roll-over of maturing medium-term funding to banks, at a lower interest rate.

The MSCI All Country World Index was down 0.3% and heading for its worst week in three, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9%.

“The recent price action in global markets has highlighted the fragility of the risk rally in the face of deteriorating global economic data and weak commodity prices,” Valentin Marinov, the head of G10 FX strategy at Credit Agricole CIB in London, wrote in a note to clients. Still, “the recent global monetary and fiscal stimulus measures have put a ‘floor’ under the risky assets,” he said.

On Thursday, the S&P 500 and the Nasdaq turned negative at the close on Thursday in the wake of a report that Gilead Sciences’s antiviral drug remdesivir had failed to help severely ill COVID-19 patients in its first clinical trial. Gilead said the findings were inconclusive because the study conducted in China was terminated early. The markets’ sensitivity to news related to the medical treatment of COVID-19 reflected investors’ desperation for a sign of when the global economy might start returning to normal, said Tim Ghriskey, chief investment strategist at New York-based wealth management firm Inverness Counsel.

“Any piece of bad news is likely to rattle the market,” Ghriskey said. “Investors are keen for a semblance of hope that they can soon crawl out of their homes and get on with some form of normal life, even if with trepidation and fear.

Business activity in the US plumbed record lows in April, mirroring dire figures from Europe and Asia as strict stay-at-home orders crushed production, supply chains and consumer spending, a survey showed. Optimism, however, was boosted after the U.S. House of Representatives on Thursday passed a $484 billion bill to expand federal loans to small businesses and hospitals overwhelmed by patients. President Donald Trump, who has indicated he will sign the bill, said late Thursday he may need to extend social distancing guidelines to early summer.

In commodities, retained their recovery from a price collapse this week that pushed U.S. crude futures into negative territory for the first time ever, helped by producers such as Kuwait saying they would move to cut output. Brent crude was up 18 cents, or 0.9%, at $21.51, after jumping 5% on Thursday. U.S. oil was steady at $16.87 a barrel, having surged 20% in the previous session.

But prices were headed for their third weekly loss and the outlook remains dim because global energy demand has evaporated due to business closures and travel curbs aimed at slowing the pandemic. In addition, some countries are running out of space to store the crude oil that they are not using.

In rates, Italian bonds dropped while bunds lead euro-area gains after EU heads fail to agree on how to finance an economic aid package to fight the pandemic. Focus is on S&P’s review of Italy’s rating later Friday, while Germany releases IFO figures. BTP-bund spread widens 12bps to 253bp, below this week’s high at 272bps. Bunds bull flattened, outperform Treasuries by 2bps. Gilts may look to an announcement at 12pm to see if BOE buyback buckets will be changed from the current GBP1.5b per operation, after Thursday’s revised bond remit was increased to GBP180b from May to July.

In FX, dollar reversed an earlier advance to trade flat as risk sentiment improved with stocks recovering ground. The Bloomberg Dollar Spot index was little changed and still set for a weekly gain of 0.9%; U.S. equity futures gained and European stocks pared losses. The euro recovered from dipping to a one-month low vs the dollar to trade up 0.1% at $1.0789; it was still set for a weekly drop of 0.8%. “USD switches between minor losses and minor gains,” said Shaun Osborne, chief FX strategist at Scotiabank, in a client note. “We look for relatively quiet trading on the session but equity trends will continue to shape intraday trading; if U.S. markets pick up, the USD should slide somewhat”

Looking at the day ahead, we get the US preliminary March durable goods orders and non-defence capital goods orders ex air, along with the final April University of Michigan consumer sentiment index. Meanwhile, the Russian central bank will be deciding on interest rates, and earnings releases include Verizon Communications, T-Mobile and American Express.

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