LONDON, April 17 — Global equities surged today as reports of encouraging trials for a possible coronavirus drug injected optimism into investors.
Asian indices posted healthy gains also as official data showed the fatal Covid-19 pandemic had not hit China’s economy as badly as some had feared.
However, WTI oil prices tanked to US$18.03 per barrel to strike a fresh 18-year low point, punished by crude oversupply and virus-hit weak energy demand.
Wall Street rose overnight after President Donald Trump laid out guidelines for a phased reopening of the US lockdown.
After the closing bell in New York, reports emerged of encouraging trials for potential coronavirus drug remdesivir, made by US biotech firm Gilead Sciences.
“Reports that a Gilead drug is producing encouraging results in clinical trials is also giving risk sentiment a lift,” said City Index anlayst Fiona Cincotta.
“Any successful treatment drug would essentially mean that economies can reopen more quickly, good news for a rebound. Without this, any recovery is expected to be more drawn out.”
The overnight trial reports gave a shot in the arm to jumpy global equities. In late March, Gilead had faced calls to not enforce exclusivity over the drug.
‘Tonic for markets’
“The latest surge for stocks shows just how keen the market is to react to any piece of good news amid the current crisis,” added AJ Bell investment director Russ Mould.
“Investors seem to be determined to remain optimistic and reports overnight that a treatment from Gilead Sciences had delivered positive results in treating coronavirus was just the tonic they were looking for.
“While there is caution about the results, which were from a small sample size, it is a reminder that a lot of highly skilled people are working on vaccines and treatments which could eventually defeat the pandemic.”
In Europe, the coronavirus pandemic in Germany is “under control” thanks to measures imposed after an early surge in cases, German Health Minister Jens Spahn declared today, as the country prepares to ease restrictions lift production of protective masks.
That helped send Frankfurt and Paris equities fizzing about four per cent higher, while London won more than three per cent in value.
“European markets are heading towards the weekend in optimistic fashion,” added IG analyst Joshua Mahony.
“With the news of a potential beneficial treatment coming on the same day that Donald Trump laid out plans to reopen the US economy, there is a clear optimism over the possibility that some semblance of normality could soon return.
“Stocks associated with global travel have received a welcome boost as traders react to plans from the likes of Germany and the US to ease lockdown restrictions.”
Oil hits fresh 2002 low
World oil prices have meanwhile collapsed this week in the face of chronic fears of a supply glut despite crude production cutbacks — as coronavirus-plagued energy demand continues to wilt.
In another volatile twist today, West Texas Intermediate (WTI) crude for May delivery tumbled to the lowest point since 2002, hit also by technical moves ahead of the contract’s expiry next Tuesday.
The contract was down nearly 20 per cent for the week, while Europe’s Brent was down 10 per cent since Monday.
Back in Asia, official Chinese data showed a 6.8 per cent contraction last quarter — the first negative growth reported since the country began logging quarterly data in the early 1990s.
The result was slightly better than the fall of 8.2 per cent forecast by economists in an AFP poll, though analysts in China and abroad have long harboured doubts about the accuracy of official GDP figures.
Key figures around 1100 GMT
London – FTSE 100: UP 3.4 per cent at 5,819.41 points
Frankfurt – DAX 30: UP 4.4 per cent at 10,746.35
Paris – CAC 40: UP 3.9 per cent at 4,521.58
Milan – FTSE MIB: UP 2.8 per cent at 17,244.76
Madrid – IBEX 35: UP 3.0 per cent at 6,962.60
EURO STOXX 50: UP 3.8 per cent at 2,918.80
Tokyo – Nikkei 225: UP 3.2 per cent at 19,897.26 (close)
Hong Kong – Hang Seng: UP 1.6 per cent at 24,380.00 (close)
Shanghai – Composite: UP 0.7 per cent at 2,838.49 (close)
New York – Dow: UP 0.1 per cent at 23,537.68 (close)
Euro/dollar: DOWN at US$1.0827 from US$1.0840 at 2100 GMT
Dollar/yen: DOWN at 107.82 yen from 107.92
Pound/dollar: DOWN at US$1.2433 from US$1.2457
Euro/pound: UP at 87.08 pence from 87.02 pence
Brent North Sea crude: UP 0.2 per cent at US$27.88 per barrel
West Texas Intermediate: DOWN 7.9 per cent at US$18.30 per barrel
— AFP