In Asia, Europe or the US, futures on major stock indices rise on the morning of Friday, April 17. Futures on DJIA increases by almost 3.7 percent, on S&P 500 by 3.33 percent, and Nasdaq 100 by 2.4 percent. In Asia, Nikkei increased by 3.26 percent, and the German DAX climbed up by more than 3 percent. The wave of enthusiasm seems to be caused by promising COVID-19 therapy.
Early data from two mid-term clinical trials testing the antiviral drug Remdesiwir from Gilead Science Inc. on patients with severe COVID-19 symptoms showed rapid effects, resolution of fever and respiratory symptoms. Nevertheless, information that may reduce optimism has also appeared. People familiar with the case say that there was no control group in which the study was conducted. Sick people did not use the ventilator, their symptoms were likely to be mild, which in turn may mean that Remdesiwir is likely to be effective only in some patients and the markets may be overreacting.
Improved sentiment on stock exchanges could also have been related to the comments of Donald Trump. With an unemployment rate of probably 15 percent, the US president wants to restore the economy to normal functioning as soon as possible. Altogether, more than 20 million Americans applied for unemployment benefits in just one month. Trump's guidelines relate to a three-phase plan. It may allow some states to start lifting limits to stop the spread of the disease this month.
Markets are also counting on further packages to stimulate the economy, and investors in Asia have been encouraged to buy shares in the hope that Beijing will provide more money when data showed that the Chinese economy shrank by 6.8 percent y/y in the first quarter of 2020. This is the first fall in GDP since at least 1992 since this data has started to be collected since then. What's more, retail sales in China fell by 15.8 percent in March 2020 compared to March 2019 and after a 20.5 percent drop in January-February. Hence the huge market expectations for another fiscal and monetary stimulus.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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