Global stock markets climbed, following pleasant news about an experimental COVID-19 drug passing the early test, and some good earnings reports coming out from emerged markets, while beaten-up oil prices surged higher.
The MSCI Index of stocks around the world climbed to 2.35% yesterday. Major U.S. indices finished well over 2%, while the European STOXX 600 index gained 1.75%.
In Asia’s trading session, equities surged to a fresh seven-week high on Thursday, buoyed by exciting early results from a COVID-19 treatment trial.
Japanese Nikkei 225 Index, surged by 2.5% to a seven-week high as well, gaining up on the week’s upsurge
Australian ASX 200 climbed up by 1.4%. The Shanghai Composite index also rose by 1%. Stock markets in Hong Kong and South Korea remained shut for public holidays.
The development of treatments for the virus causing the pandemic is seen by financial market experts as important in helping countries minimize the negative impact that has weakened global economies.
At the American trading session, the Dow Jones 30 Index gained 2.21%, to close at 24,633.86, the S&P (Standard & Poor) 500 index gained 2.66%, to close 2,939.51, not forgetting the Nasdaq 100C surging 3.57%, to close at 8,914.71.
Michael Arone, Chief Investment Strategist at State Street Global Advisors, told CNBC yesterday how the markets reacted even without knowing the Fed’s plan. He said:
“They have a deep-pocketed buyer that doesn’t care about price, doesn’t care about fundamentals, that’s going to ensure there is liquid and smooth functioning of markets.”
However, data released yesterday showed that the American economy declined in Q1 2020 at its fastest pace since the Great Recession, dropping at about 5% annualized rate.
The U.S (United States.) Federal Reserve left interest rates at 0.25% on Wednesday and vowed to use all available monetary options in boosting the American economy amid an ongoing COVID-19 pandemic that had negatively disrupted growth in the global economy.
Oil price gained more than 10% after U.S. crude reserves went lower than expected and an upsurge in the use of gasoline boosted optimism that energy consumption would recover in emerged markets, as the self-lockdown restrictions ease.
Brent crude futures LCOc1 settled at $24.64 a barrel, up 9.32% on Thursday, 6.56 am local time.
In addition, the plunging oil demand caused by the COVID-19 pandemic is projected to be seven times higher than the plunge that occurred after the monetary crisis in 2008.
“In absolute terms, the decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third-largest energy consumer,” the agency’s Global Energy Report said.
Gold has been battling in a tug-of-war between the onslaught of COVID-19 and rising hope that global stimulus efforts will keep increasing to support the global economy. It settled at $1,713 at 7 am local time.
In currencies, the dollar index, an index that is used to gauge the U.S dollar against six major peers, dropped by 0.339%