Yesterday the markets were marked by a
greater appetite for risk. The modern American company, Sorrento
Therapeutics Inc. revealed that tests of its
vaccine against covid-19 had shown positive progress, motivating investors to
look at the stock market.
In particular, the North American
indices rose with the Dow Jones index up 3.85 %
while the Nasdaq index rose by 2.44 % and the S&P
500 index gained 3.15 %. In Europe, its benchmark
- Stoxx 600 - gained 4.07 %.
In the debt market, yields
eventually rose, showing a more predominant appetite for risk
throughout the day.
Both the European stock exchanges and the US futures on S&P500, Nasdaq and Dow Jones stock indexes opened higher and are trading further in positive territory. Sources of such nice market performances today provided numerous good news from the antivirus front.
First, the California-based Sorrento Therapeutics biotechnology company claimed a breakthrough on a COVID-19 medical war by saying its experimental antibody candidate medicament showed great potential in blocking COVID-19 infections in pre-clinical studies.
On Friday, the market sentiment was an appetite for risk. The stock markets ended up closing on positive ground, thanks to a final "rally" that placed the Dow Jones and the S&P 500 indexes above the waterline, joining the technological Nasdaq index, which was already rising. Supporting it was the continued rise in the price of a barrel of crude oil.
In particular, the Stoxx 600 - European benchmark index - appreciated by 0.47%. On the other side of the Atlantic, the S&P 500 index grew by 0.36% while the Dow Jones index gained 0.25% and the Nasdaq index rose by 0.79%.
Yesterday was marked by mixed market behaviour. For much of the day there was a great deal of risk aversion as US Federal Reserve (Fed) Chairman Jerome Powell said that Congress and the White House may have to invest more to ensure that the initial rapid response to the economic downturn continues and that there are signs that the recovery will take longer than initially anticipated.
In particular, the Dow Jones index rose by 1.62% while the S&P500 index grew by 1.15% and the Nasdaq index rose by 0.91%. Stoxx 600 - European benchmark index - fell by 2.17%.
Better than expected Chinese industrial production data helped the European stock markets to post some moderate gains on Friday along with a rather positive Thursday's close on Wall Street in New York. As China's Retail Sales on year-to-year basis showed 7.5% decline in April 2020 vs April 2019 after a similar 20.5% drop in February and 15.8% fall in March, the Chinese National Bureau of Statistics published its industrial production indicator, which increased 3.9% year-on-year, far beyond the average expert forecasts of only a 1.5% increase.
Yesterday was marked by a substantial aversion to risk. Fears of a possible second wave of the virus, as well as the statement from the Federal Reserve's (Fed) chief Jerome Powell in which he referred to a slower-than-expected economic recovery, prompted sharp declines in stock indexes.
In the United States, the Dow Jones index lost 2.17% while the Nasdaq index depreciated by 1.55% and the S&P500 index fell by 1.75%. In Europe, its reference index - Stoxx 600 - closed at red with 1.95% less.
The fundamental background outside the markets has changed little ideologically over the past 24 hours. The same three top discussions are in focus: how realistic is the chance for a truly strong second wave of infections as the economy reopens, how safe is the temporary break in American-Sino relations, and whether the possibility of switching to negative interest rates in the US still exists or not in connection with the first two sources of worries?
All three questions have no clear answer yet. So, the markets are at a certain crossroads.
Slight swoon of the US stock indexes last night was caused by the sentences of the White House main medical advisor Dr. Fauci who shared his worries about a possible powerful second wave of infection in summer due to the opening-up of economies too early in some heavily populated American states. In addition, he cooled the ardor of optimists by telling them that if vaccine candidates are successful, it would be known by late fall or early winter, even despite the fact that phase 2 and phase 3 of clinical trying on people will already have started in late spring and early summer.
Yesterday was marked by a great variation of feeling throughout the day. The market sentiment that eventually prevailed was risk aversion with the possibility of a second wave of concern for investors.
In the United States, the Dow Jones index fell by 1.89% while the S&P500 index fell by 2.05% and the Nasdaq index depreciated by 2.06%. On the European side, its benchmark - Stoxx 600 - gained 0.26%.
In the debt market, yields ended up falling, this being a normal correlation on a day of greater risk aversion.
Brent crude prices bounced from the bottom of $16 and settled around $30 per barrel, which seem to be a physiologically strong resistance level. This balance may sustain as many contrary factors affecting crude prices.
From the demand side, there is a positive factor of a certain easing of restrictions imposed against the pandemic in many countries. Signs of business activity are emerging andthe driving season is close to opening. But there are also worries that the recovery in demand will be slow and it will not reach 30% of its fall or 30 million bpd.