U.S. stock futures surged late Thursday after a report of promising results from Gilead (GILD), who are currently testing a drug for treatment of COVID-19 patients, and after Trump outlined the plan for the re-opening of the U.S. economy.
Futures contracts pointed to a gain of more than 800 points, or 3.5%, for the Dow Jones Industrial Average, S&P 500 futures signified to rise of 3.3%, and the Nasdaq Composite index is looking towards a 2.5% increase.
Trump outlined a three-phase process for re-opening the U.S., but left it to individual state governors to decide how and when to begin.
Phase One would require strict social distancing for everyone in public, allowing only gatherings up to 10 people and discouraging all nonessential travel.
Phase Two would see a resumption of travel and an increase in allowable gatherings to 50 people at a time.
Phase Three would see normal activity resume for the most part, but will require heightened efforts to identify and isolate any new infections.
Infectious disease experts generally advise that cases need to decline for two weeks before it’s safe to consider relaxing stay-at-home orders.
Pressure to re-open the U.S. economy has been growing amid unprecedented layoffs that have seen 22 million Americans file for unemployment since the middle of March, when shut-down orders began to be implemented.
Currency Coverage
The dollar slipped on Friday after a media report about a COVID-19 treatment drug that may be released ahead of schedule, as well as optimism about re-opening the world’s largest economy. This encouraged investors to jump in to riskier currencies.
The Australian and New Zealand dollars led gains, with the kiwi currency jumping as much as 1% to $0.6023. The pound and Euro also rose, recouping some of the recent losses.
Medical news site STAT, citing a recorded discussion between doctors involved in a clinical trial, said that the majority of 125 patients given Gilead’s remdesivir drug have recovered and been discharged.
Gilead explained that anecdotal reports do not provide the data needed to determine the safety or efficacy of remdesivir as a treatment for COVID-19. But they expect more official data to be available at the end of the month.
“The market is looking for good news — grasping and hoping and praying,” said Imre Speizer, FX analyst at Westpac, “People just want to get on the positive bandwagon.”
Asian Markets See Some Upside
Asian markets surged on Friday after China reported economic data that, while still bleak, appeared better than expected.
The strong open followed an overnight rally on Wall Street powered by increased buying of Amazon, health care stocks and other market niches that are thriving in the coronavirus crunch.
China reported that its economy contracted 6.8% from January to March as the country battled the coronavirus. This is the worst performance since at least the late 1970s.
It’s not as bad as the double-digit declines some analysts had forecasted, but the latest numbers suggest the recovery will be a slow one.
Julian Evans-Pritchard of Capital Economics said in a commentary, “The March data add to broader signs that China’s economy is past the worst. But the recovery will probably continue to underwhelm. Indeed, the high frequency indicators we track suggest that, after an initial bounce as containment measures were eased, the recovery in activity has since slowed to a crawl.”