NEW YORK, May 1 — World equity benchmarks dipped yesterday to close their best month in 11 years as a rebound in oil prices, encouraging early results from a Covid-19 treatment trial and expectations of more government stimulus helped ease the pain of February and March.
Safe-haven assets including the dollar and government bonds were little changed, reflecting an unsettled market weighed down by concerns about containing the coronavirus outbreak and jobs data in the United States that was worse than expected.
“It’s a hope-based rally rather than an evidence-based rally,” said Anthony Doyle, cross-asset specialist at fund manager Fidelity International in Sydney.
There were still worries about a second wave of infections, Doyle said, adding that huge piles of cash waiting to go back into the markets suggest investors remained nervous.
MSCI’s gauge of stocks across the globe shed 0.79 per cent following broad losses in Europe and gains in Asia that pushed Japan’s Nikkei to a seven-week high.
The index gained 10.5 per cent in April, its best month since an 11.3 per cent gain in April 2009 as the markets were recovering from the 2008 financial crisis.
On Wall Street, the Dow Jones Industrial Average fell 288.14 points, or 1.17 per cent, to 24,345.72, the S&P 500 lost 27.08 points, or 0.92 per cent, to 2,912.43 and the Nasdaq Composite dropped 25.16 points, or 0.28 per cent, to 8,889.55.
“We have gone back to a turbocharged version of the great financial crisis,” said Simon Fennell, a portfolio manager in William Blair’s global equity team, referring to how markets have surged on mass central bank and government stimulus.
Declines in the equity market came on the heels of a strong finish on Wall Street on Wednesday after partial results from a trial of Gilead’s antiviral drug remdesivir suggested it could help speed recovery from Covid-19, the respiratory disease caused by the new coronavirus.
Partial results from the 1,063-patient US government trial of Gilead’s remdesivir were hailed as “highly significant” by the top US infectious disease official, Anthony Fauci.
But since treatment hopes do not seem to take into account regulatory and distribution difficulties, should a treatment be found, currency and bond markets were more circumspect.
“Any positive medical development is helpful,” said Westpac FX analyst Sean Callow. “But no one should be counting on a major breakthrough. The key for markets is control of the spread of the virus.”
Safe haven assets held steady after US unemployment claims were greater than expected. Benchmark 10-year notes last fell 4/32 in price to yield 0.6377 per cent, from 0.627 per cent late on Wednesday.
Initial claims for state unemployment benefits totaled a seasonally adjusted 3.839 million for the week ended April 25, the US government said. That was down from 4.442 million in the prior week.
Commodities were also set to close the month significantly higher. Gold is set for its best month in four years and copper, which is seen as a something of a bellwether of global industry, was on track for its best performance since December 2017.
Hope that demand could soon return helped push oil prices broadly higher. US crude recently rose 24.97 per cent to US$18.82 (RM80.89) per barrel and Brent was at US$25.39, up 12.64 per cent on the day. — Reuters