US actions join global rally on hopes for coronavirus treatment

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US stocks surged when trading began on Wall Street, drawing inspiration from Asian and European markets, as investors looked beyond a historic contraction in the Chinese economy and placed their hopes for the emergence of a potential treatment against coronaviruses.

On Friday, the S&P 500 added 2% to the opening, continuing a sharp rebound that led the benchmark to rebound more than 30% from its lows in mid-March.

Positive sentiment on Wall Street follows an optimistic morning of trade in Europe after a report suggested that a drug developed by Gilead had shown positive results in a clinical trial, giving investors hope that a treatment could ease the pandemic and open up the global economy.

The Stoxx 600 in Europe rose 2.8% in afternoon trade on the continent, with gains of 3.3% for the Dax 30 in Frankfurt, 3.5% for the Cac 40 in Paris and 2.9% for the London FTSE 100.

“Investors appear to be relying on encouraging news from the medical publication Stat that a group of patients treated in Chicago with a trial of Gilead’s remdesivir” have experienced rapid recovery from fever and respiratory symptoms, “said Jim Reid at Deutsche. Bank.

However, analysts cautioned against overreacting to the reports before seeing the full data.

“We appreciate the larger market being in a risky, half-full environment and investors are looking for a good story,” said Michael Yee, biotechnology analyst at Jefferies.

The session in Asia was also generally positive despite official Chinese data showing that the world’s second largest economy fell 6.8% year-on-year in the first quarter due to disruption caused by virus-induced blockages, marking the first drop in gross domestic product since 1976.

The recovery in global stock markets over the past month has seen them moderate their losses after falling in late February and early March when major economies found themselves frozen.

The S&P 500 is only 12% lower since the start of the year, after losing more than 32% of its value, while the Nasdaq 100, which follows the biggest companies in the Nasdaq Composite, fell on Thursday in positive territory for the year, after adding 30 percent in the four weeks. It was up 0.5% on Friday morning.

Investors were comforted by indications that the foreclosure measures seem to be working and welcomed the sweeping monetary and fiscal interventions. But analysts have warned that the rebound may be difficult to maintain.

“The market may have gotten ahead of itself,” said analysts at Bank of America Global Research.

“Macroeconomic support measures, at best, can only keep the economy alive during the” induced coma. ” We still don’t know how long the foreclosure will last, how long the exit plans will take and what foreclosure measures will remain, even when the economies open up, “analysts said.

Meanwhile, crude oil prices in the United States fell to a new 18-year low below $ 18 a barrel, with energy markets still under pressure from a record glut created by the coronavirus, despite a historic agreement to reduce global supply.

West Texas Intermediate was trading at $ 17.71, down 10.8% on the day, traders betting that oil storage would fill up quickly worldwide. Crude oil, the international benchmark, rose slightly to $ 28.09 a barrel, but lost about 10% this week.

In fixed income securities, the 10-year US Treasury yield remained stable at 0.615%.

Additional report by David Sheppard in London

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