Wall Street jumps on coronavirus treatment hopes
US stocks climbed on Wednesday as investors focused on positive data from a trial of a potential coronavirus treatment, rather than worse-than-feared US gross domestic product figures or the latest pronouncements from the Federal Reserve.
Gilead Sciences, the California-based biotech company, said in a pre-market update that its potential coronavirus drug remdesivir had produced positive results in a US study.
The S&P 500 was 2.6 per cent higher in afternoon trading, while the tech-weighted Nasdaq rose 3.4 per cent. Shares in Gilead advanced as much as 8 per cent.
“The data suggest remdesivir is likely approvable and should have a role in certain corona subpopulations,” said Brian Abrahams, senior biotech analyst at RBC Capital Markets.
But the Gilead evidence is far from conclusive — and the same drug was unsuccessful in another trial in China.
Global equity markets have repeatedly swung around on news about remdesivir trials. Earlier this month, they jumped after a report suggested the drug had shown positive results in one study. The accidental early publication of results from another trial suggested the drug had had no effect on patients.
On a day that should help investors better gauge the impact of the pandemic, data released before the bell showed US growth contracted in the first quarter at the fastest rate since 2008.
At the conclusion of its two-day policy meeting, the Federal Reserve kept interest rates near zero and pledged to take additional measures if needed, citing the “tremendous human and economic hardship” caused by the coronavirus pandemic.
The US dollar index, which tracks the greenback against global peers, was down 0.3 per cent. The yield on the benchmark 10-year Treasury note was close to flat at 0.61 per cent.
In Europe, the Stoxx 600 rose 1.8 per cent, taking the benchmark’s rise this week to 5 per cent as some countries across the continent pushed ahead with plans to reopen after weeks of lockdowns.
Switzerland announced on Wednesday that its restaurants and cafés would reopen on May 11, making the alpine state the first in Europe to allow its hospitality industry to resume widespread trading.
Oil prices rebounded on hopes that a glut in global crude markets was easing and the reopening of big economies would help fuel a rise in demand.
The market has been rocked by sharp price swings in recent days, with traders concerned a drop in demand caused by the coronavirus pandemic would lead to storage problems for a sector contending with an oversupply of crude.
Supply worries were eased by overnight figures from the American Petroleum Institute, an industry group, which reported that US oil inventories increased by fewer than 10m barrels in the week ending April 24. Analysts polled by Bloomberg had forecast a rise of 12m barrels.
Oil prices rose further on Wednesday morning in New York after US government data also showed a smaller rise in stockpiles than forecast, while domestic production slowed.
West Texas Intermediate, the US crude oil benchmark, climbed as high as $16.78 a barrel and was recently up more than 24 per cent at $15.31. Brent crude, the international marker that has also been pummelled in recent weeks, was up more than 10 per cent at $22.69 a barrel.
Analysts at UBS warned that the possibility of WTI prices returning to sub-zero levels next month could not be ruled out, however, as traders look to offload futures contracts for June delivery of crude.
In the bond market, the Italian government’s borrowing costs rose after Fitch downgraded the country’s credit rating to a single notch above “junk”, in an unscheduled update.
Gains across big stock markets in Asia were led by Australia’s S&P/ASX 200, which added 1 per cent. The positive session on Wednesday pushed the MSCI Asia Pacific index to a level up 20 per cent from its recent lows, meeting the technical definition of a bull market.