European stocks rally despite investor fears of a second coronavirus wave in the US and a record contraction in the UK economy

• European and US stocks reversed losses on Friday even as investor fears grew over a resurgence of coronavirus infections in the US, and after bleak economic data emerged from the UK.
• Futures tied to the Dow Jones Industrial Average rose 2.3%, and London's FTSE-100 rose 1.3%.
• On Thursday, all three major indexes tanked following a dire outlook from the US central bank which signalled permanent economic damage and a drawn-out period of high unemployment.
• "One wonders what the situation will look like a few weeks from now elsewhere in the States given the large numbers of protestors not able to engage in much social distancing," Rabobank analysts said in a note.
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European stocks and US futures reversed losses on Friday despite investors turning wary of a second coronavirus wave in the US, dashing hopes for a stronger pickup in the economy.

London's benchmark FTSE 100 rose 1.3% despite data from the UK that showed its economy shrank by 20.4% in April, the largest monthly fall in the country's history.

"A 20.4% decline in GDP is clearly unprecedented, but not unexpected," said PwC's chief economist, Jonathan Gillham. "Breaking down the 20.4% reduction in GDP, the decline in retail sales accounts for around 15% of this figure, with accommodation and restaurants contributing around 9% and construction 12%."

While April was expected to be the "low point," subsequent readings for the UK should improve although repercussions will be felt for some time, according to Adrian Lowcock, head of personal investing at Willis Owen.

In the US, futures tied to the Dow Jones rose 2.3% reversing losses of as much as 6.9% on Thursday when all three major US indexes posted their biggest single-day declines in three months.

Market participants weighed the US Federal Reserve's response earlier this week and observed a rise in new coronavirus cases continuing to soar in parts of the economy, like Texas which has reopened.

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Florida, Arizona, and California have also revealed case spikes. The total case count has now risen to over 2 million in the US, with about 116,035 fatalities.

If the Fed's willingness to continue economic stimulus efforts, purchase multibillion-dollar bonds, and leave rates at near-zero "still isn't enough to prevent the market tumbling nearly 7%, then surely we need something extra done right now," Rabobank analysts said in a note.

Analysts measured the downbeat Fed outlook, and also whether reopening the economy would mean a virus-induced downturn.

"One wonders what the situation will look like a few weeks from now elsewhere in the States given the large numbers of protestors not able to engage in much social distancing," Rabobank said.

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Here's the market roundup as of 10.20 a.m in London (5.20 a.m. ET):

• Asian indexes were down with China's Shanghai Composite down 0.1%, Hong Kong's Hang Seng down 0.7%, and Japan's Nikkei down 0.7%.
• European equities rose, with Germany's DAX up 1.3%, Britain's FTSE 100 up 1.3%, and the Euro Stoxx 50 up 1.7%.
• US stocks are set to open higher. Futures underlying the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose between 1.6% and 2.3%.
• Oil prices rose, with West Texas Intermediate up 0.2% at $36.43, and Brent crude up 0.3% at $38.67.
• The benchmark 10-year Treasury yield rose to 0.05%.
• Gold rose 0.2% to $1,742 per ounce.