Stocks charge higher on hopes for progress in fighting virus
Stocks charged higher around the world Wednesday following an encouraging but preliminary report on a possible treatment for COVID-19.
The S&P 500 rose 1.9per cent in early trading, and stocks in Europe also jumped after Gilead Sciences put out a statement noting positive data from a trial of its drug remdesivir.
The news hit markets at the same moment the U.S. government reported that the nation’s economy shrank at a 4.8per cent annual rate in the first three months of the year, the worst showing since the financial crisis in 2008.
The Federal Reserve releases a statement later Wednesday on interest rate policy.
AP’s earlier story is below: Global stocks mostly edged up on Wednesday ahead of US economic growth figures and a Federal Reserve rate decision.
Investors seemed buoyed as more governments plan to ease anti-virus controls and allow businesses to reopen.
Markets in Europe were up slightly, while Shanghai and Hong Kong advanced. Japanese markets were closed for a holiday.
Wall Street appeared set for small gains on the open.
The French and Spanish governments announced plans Tuesday to allow restaurants and other businesses to reopen gradually. They followed Italy, which announced similar plans on Sunday.
Reopening hopes continue to characterize the market, Jingyi Pan of IG said in a report.
In midday trading, London’s FTSE advanced 0.9per cent to 6,008 and the DAX in Frankfurt added 0.3per cent to 10,830. The CAC 40 in France shed 0.2per cent to 4,561.
Earnings reports in Europe are mixed, with Volkswagen saying its business is resilient despite a drop in sales but planemaker Airbus warning that the air travel industry’s troubles are just beginning.
On Wall Street, the future for the benchmark S&P 500 index was 0.6per cent higher and that for the Dow Jones Industrial Average was up 0.5per cent.
Investors will keep an eye on GDP data for the U.S. first quarter, which are expected to show an annual drop of 5per cent or more. The decline will end the longest economic expansion on record.
The Fed is not expected to take any major actions after the end of its two-day meeting Wednesday, having already deployed massive amounts of stimulus to help credit flows and businesses.
However there will be interest in its views, with Fed Chairman Jerome Powell holding a news conference.
In Asia, the Shanghai Composite Index closed 0.4per cent higher at 2,822.44 and Hong Kong’s Hang Seng added 0.3per cent to 24,643.59. The Kospi in Seoul advanced 0.7per cent to 1,947.56.
The ASX-S&P 200 in Sydney gained 1.5per cent to 5,393.40 while India’s Sensex added 1.7per cent to 32,657.03. Singapore and Jakarta gained 0.4per cent while New Zealand shed 0.9per cent.
Investors who want to know when the deepest global downturn since the 1930s might end have been encouraged by plans to reopen factories, retailing and travel.
Economists warn they are too optimistic and say evidence is mounting that the damage is even worse than forecast.
On Wednesday, New Zealand allowed construction sites, restaurants and some other businesses to reopen following a decline in new virus cases.
South Korea’s government reported March industrial production increased by 4.6per cent compared with the previous month.
We won’t get too many positive reports on activity in Asia over the coming months, so we should probably make the most of this one, said Rob Carnell of ING in a report.
In the United States, some governors are rolling back curbs and allowing restaurants, hair salons and other businesses to reopen despite warnings by health experts that moving too fast might lead to new outbreaks.
President Donald Trump, running for re-election amid a slump that has wiped out more than 10 million jobs, is pressing other governors to lift lockdowns.
Gov. Andrew Cuomo of New York, one of the hardest-hit and most populous states, says controls will be eased only after numbers of new cases decline.
Elsewhere, Singapore on Tuesday extended its lockdown by four weeks after reporting its highest one-day toll of new cases a day earlier.
India also reported a one-day record for new infections on Monday.
Many professional investors are skeptical of the U.S. stock market’s big rally, which has driven the S&P 500 up 28per cent from its March low.
They are wary of how fast stocks have rebounded despite the gradual pace of resuming business activity.
The yield on the 10-year U.S. Treasury fell to 0.58per cent on Tuesday from 0.65per cent late Monday. Yields tend to fall when investors are downgrading expectations for the economy and inflation.
In energy markets, benchmark U.S. crude for June delivery gained USD2.03 to USD14.37 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 44 cents the previous day to settle at USD12.34. Brent crude, used to price international oils, added 89 cents to USD23.63 per barrel in London. It rose 47 cents on Tuesday to USD20.46.
The dollar declined to 106.50 yen from Tuesday’s 106.86 yen. The euro advanced to USD1.0850 from USD1.0847. (AP)