Europe, U.S. financial markets jump on coronavirus drug hopes
Financial markets in Europe and the U.S. jumped on Wednesday amid efforts to treat the coronavirus
Financial markets in Europe and the U.S. jumped Wednesday morning with traders reportedly buoyed by scientific efforts to treat the new coronavirus.
Early Wednesday, Sky News reported a “significant breakthrough” by scientists at Imperial College London in the U.K., who claim to have reduced a stage of the development time for a coronavirus vaccine from “two to three years to just 14 days.”
The lead scientist told the media outlet he would start testing it on animals as early as next week. Another separate media report out of China Wednesday claimed that researchers within the country had found two separate drugs that can inhibit the effect of the new strain of the coronavirus.
The report said preliminary tests on in-vitro samples were effective at inhibiting the coronavirus in the test tube, but did not specify successful treatment in people carrying the virus.
The Stoxx 600 index, which represents Europe’s largest-listed companies, extended gains throughout Wednesday morning, notching a 1% gain for the session, and was only two points from touching an all-time high.
U.S. stocks also surged at the open of trade with the Dow Jones Industrial Average moving higher by 300 points. All three major U.S. indexes are on course to finish higher for the third straight day.
Stocks stateside were also boosted after U.S. private payrolls rose by 291,000 in January —the biggest monthly payrolls gain in nearly five years.
In Geneva, the World Health Organization was asked about the new reports and said in a statement Wednesday: “There are no known effective therapeutics against this 2019-nCoV and WHO recommends enrolment into a randomized controlled trial to test efficacy and safety.”
A master global clinical trial protocol for research and prioritization of therapeutics is ongoing at the WHO, it added.
An upward revision to both U.K. and euro zone services and manufacturing data for January also boosted sentiment in equities. The move follows a blockbuster Tuesday session for Europe’s stocks which erased year-to-date losses.
Meanwhile, oil prices — weighed down in recent days by demand concerns — also rose. Brent crude futures were up by 2.5% at 10:30 a.m. London time, at $55.30 per barrel.
Stock trading strategist for Citigroup, Jimmy Conway, told CNBC Wednesday that the market is currently weighing the economic impact of the coronavirus against increased liquidity coming from China.
Anything that limits that economic impact is going to be taken well, as the liquidity is likely to remain in place until well after the virus has been contained, Conway said via email.
The Citigroup strategist said European stocks were also benefiting from improved the Purchasing Managers’ Index (PMI) data on Wednesday that backed up early signs of stronger corporate profits.
He said any sign of a reduced impact from the coronavirus would see markets settle back to a more familiar scenario where improving economic activity was being underpinned by the European Central Bank’s current stimulus package.