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Dow Futures jumped as Coronavirus Antibody Breakthrough Announced

(Thu, 7 May 2020). The 1% jump comes as yet another promising coronavirus treatment was announced overnight. Researchers at Kitasato University and Kao Corporation revealed a new antibody that ‘neutralizes’ the coronavirus in a lab setting.

Bloomberg reported:
Kao and Kitasato University have discovered an antibody that helps suppress the coronavirus and hope the discovery will lead to the development of the treatments for the disease.

This isn’t the first time equities have rallied on hopes for a virus treatment or vaccine. Traders remain optimistic that a therapeutic response could see economic activity to normal sooner rather than later.

 

The Race For Coronavirus Therapy And Vaccines
The Japanese discovery is the second major antibody breakthrough announced this week. On Monday, the Nature Communications journal published a similar antibody study. Scientists discovered that a lab-made antibody could block the novel coronavirus. Both discoveries are a promising first step. The treatments will now go through clinical trials to be confirmed.

The markets are responding positively to any therapy or treatment because it could limit the damage of a second coronavirus wave in the fall. Crucially, it could help avoid further lockdowns and economic destruction. Late last month, we saw the Dow Jones shoot higher on news that Gilead’s drug Remdesivir had a positive effect on Covid-19 patients

 


Another Brutal Jobless Claims Report
All eyes are now firmly on today’s jobless claims report. More than 30 million have claimed unemployment since the crisis began, wiping out all job gains since the last recession. St. Louis Federal Reserve President James Bullard estimates that 20% of America may lose their job before the crisis is over. The unemployment rate is going to be extremely high. We think 20% isn’t unlikely, could even be higher than that. Yesterday’s ADP private payrolls showed employment dropping off a cliff with 20 million jobs wiped out in April. The monthly Labor Department’s job report will follow on Friday. Bullard says it will be “one of the worst ever.”

 


Bad News Won’t Shock The Dow Jones Any More
Despite the carnage on the jobs market, don’t expect the Dow Jones to blink. As Brian Belski of BMO Capital Markets put it, the stock market has already priced in the economic shock. The dramatic 30% plunge in March took care of that.

The Dow Jones has already priced in two quarters of a recession, he told CNBC. But he warned that stocks could turn south if that economic damage continues through the third and fourth quarters.

 

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