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Stock Futures Recover on Positive News about Coronavirus Treatment
US Market
The major U.S. index futures are currently pointing to a modestly lower open on Friday but have climbed well off their worst levels.
The futures have shown a notable recovery after Gilead Sciences (GILD) said remdesivir showed a sharp mortality risk drop when used to treat patients suffering of coronavirus.
U.S. stocks ended mostly lower Thursday as the relentless surge in coronavirus cases across America raised fears of another lockdown in several states and dimmed prospects for a quick economic recovery.
The major averages ended the session mixed. The tech-laden Nasdaq composite index surged up 55.25 points or 0.53 percent to settle at 10,547.75, a record closing high. The Dow slid 361.19 points or 1.39 percent to settle at 15,706.09, while the broader S&P 500 drifted down 17.89 points or 0.56% to 3,152.05.
Concerns about coronavirus infections in the country rose after more than 60,000 new Covid-19 cases were reported on Wednesday, the biggest increase ever reported by a country in a single day. Florida reported a record increase in hospitalizations.
With Covid-19 cases on the rise in 42 states across the United States, investors fear that re-imposition of lockdown measures will significantly weaken recovery chances.
On the economic front, the data from the Labor Department showed a bigger than expected decrease in first-time claims for U.S. unemployment benefits. The report said initial jobless claims tumbled to 1.314 million, a decrease of 99,000 from the previous week’s revised level of 1.413 million.
Economists had expected jobless claims to slump to 1.375 million from the 1.427 million originally reported for the previous week.
Among the major losers in the Dow average today, Exxon Mobil (XOM), Chevron (CVX.TO), General Electric (GE) and Boeing (BA) lost 3.6 to 4.4%.
Goldman Sachs (GS), Verizon (VZ), American Express (AXP), Coca-Cola (KO), Caterpillar (CAT), JP Morgan Chase (JPM), IBM (IBM) and Nike (NKE) also declined sharply.
Walmart (WMT) shares moved up more than 2.5% and Cisco Systems (CSCO) climbed up nearly 2%.
Amazon (AMZN), Costco Wholesale (COST), Cognizant Technology (CTSH), Nividia (NVDA), Tesla (TSLA), eBay (EBAY), Dollar Tree (DLTR) and Cisco Systems (CSCO) climbed 1.7 to 3.3%, contributing to the gains of the Nasdaq.
Wallgreens Boots Alliance, Inc (WBA) shares plunged more than 8% after the drugstore chain’s earnings for the third quarter missed analysts’ expectations and it also forecast earnings for the full-year below estimates. The company reported net loss of $1.71 billion or $1.95 per share for the third quarter compared to net income of $1.03 billion or $1.13 per share in the year-ago period.
American Airlines (AAL), Ross Stores (ROST) and Dish Network (DISH) also ended sharply lower.
U.S. Economic Reports
Producer prices in the U.S. unexpectedly decreased in the month of June, according to a report released by the Labor Department on Friday.
The Labor Department said the producer price index for final demand fell by 0.2 percent in June following a 0.4 percent increase in May. Economists had expected prices to climb by another 0.4 percent.
Excluding food and energy prices, core producer prices inched up by 0.1 percent in June after rising by 0.3 percent in May. Core prices were also expected to increase by 0.4 percent.
Europe
European shares edged higher on Friday despite renewed fears over surging coronavirus cases in the U.S. and elsewhere around the world.
The United States again saw its sixth daily record for coronavirus cases in 10 days, with the surge driven largely by states in the South and the West that were among the first to ease restrictions established during the virus’s initial wave in the spring. At least six states set single-day case records on Thursday.
Elsewhere, record spikes of infections in Hong Kong and Tokyo fueled fears of a second wave hitting Asia.
Hong Kong is closing its schools again due to a spike in locally transmitted coronavirus cases. Australia said it would halve the number of citizens who can return home at any one time to relieve pressure on its quarantine system.
The pan European Stoxx 600 rose 0.2 percent to 364.24 after declining 0.8 percent on Thursday.
The German DAX edged up 0.1 percent, France’s CAC 40 index was marginally higher and the U.K.’s FTSE 100 was up 0.3 percent.
Tech stocks were rising after Apple chipmaker Taiwan Semiconductor Manufacturing Co. posted revenue just above estimates for the June quarter.
Infineon Technologies advanced 2 percent and STMicroelectronics surged 5.4 percent.
Osram Licht AG shares rose over 1 percent. Austrian sensor manufacturer ams AG said that it has successfully closed acquisition of the German lighting company. ams shares climbed 3.4 percent.
Genetic testing firm Qiagen rose 1.2 percent after it reported a 68 percent rise in quarterly earnings.
Swiss duty free operator Dufry slumped 7 percent after it announced a radical restructuring to shore up its balance sheet.
Danish brewer Carlsberg rallied 5.2 percent. The company reported improved performance in Western European region towards the end of the second quarter.
International Personal Finance soared nearly 15 percent. The home credit and digital loans provider said it expects to progressively accelerate credit issued in the coming months with lending remaining focused on its customers.
Trafalgar Property Group jumped as much as 45 percent after entrepreneur Chris Akers, with a stake of 6.15 percent, was revealed as a substantial shareholder.
In economic releases, France’s industrial production rebounded at a faster than expected pace in May as coronavirus containment measures were relaxed, data from the statistical office Insee showed.
Industrial output grew 19.6 percent on a monthly basis, reversing a 20.6 percent fall in April. This was the first rise in three months. Production was forecast to climb 15.1 percent in May.
At the same time, manufacturing output advanced 22 percent, in contrast to a 22.3 percent fall in the previous month.
Asia
Asian stocks declined on Friday as a surge in coronavirus cases stoked fears that new lockdowns could take a toll on the economic recovery. Investors also turned cautious ahead of the corporate earnings season beginning next week.
Chinese shares fell as state media discouraged retail investors from chasing the market higher and U.S.-China tensions reemerged. The U.S. on Thursday imposed sanctions on the highest-ranking Chinese official yet targeted over alleged human rights abuses against the Uighur Muslim minority.
The benchmark Shanghai Composite index fell 67.27 points, or 1.95 percent, to 3,383.32, snapping an eight-day winning streak. Hong Kong’s Hang Seng index lost 1.84 percent to finish at 25,727.41.
Japanese shares hit a one-week low as the safe-haven yen strengthened and the Tokyo Metropolitan Government reported an all-time high of 243 new coronavirus cases in the city, fueling concerns that the path to economic recovery could be hindered.
Meanwhile, the Bank of Japan downgraded economic assessment of all nine regions for the second straight time, citing the impact of the novel coronavirus.
According to the latest quarterly Regional Economic Report, all nine regions reported that the economic situation is worsening.
The Nikkei average fell 238.48 points, or 1.06 percent, to 22,290.81, its lowest close since July 2. The broader Topix index ended down 1.42 percent at 1,535.20, also marking its lowest close since June 15.
Uniqlo owner Fast Retailing slumped 3.3 percent after lowering its outlook for the year. Ryohin Keikaku plummeted 5.4 percent after its U.S. subsidiary filed for Chapter 11 bankruptcy protection due to coronavirus.
Retail group Aeon Co. shed 1 percent after reporting a net loss for the first quarter. Sony Corp rose 1.4 percent on reports that it has acquired a minority stake in Epic Games – the creator of Fortnite and Unreal Engine.
Australian markets ended lower as authorities grappled with rising coronavirus cases in Victoria, which recorded 288 new Covid-19 cases overnight, the largest single day in Australia since the pandemic began.
The benchmark S&P/ASX 200 index dropped 36.30 points, or 0.61 percent, to 5,919.20, while the broader All Ordinaries index ended down 38.60 points, or 0.64 percent, at 6,036.30.
Gold miners snapped three straight sessions of gains after gold prices retreated. Evolution Mining tumbled 3 percent, Newcrest gave up 1.4 percent and Northern Star Resources lost about 1 percent. Bellevue Gold slumped 4 percent after announcing a discounted share placement.
Energy companies Woodside Petroleum, Origin energy, Santos and Oil Search plunged 2-4 percent as oil extended losses from the previous session on worries that renewed lockdowns to contain the spread of coronavirus in the United States will restrict fuel demand recovery in the nation.
Seoul stocks fell notably as rising new coronavirus cases around the world made investors risk averse. The benchmark Kospi ended down 17.65 points, or 0.81 percent, at 2,150.25 after daily Covid-19 cases in the United States topped 60,000 for the first time Thursday.
Closer home, South Korea added 45 new Covid-19 infections today, marking a steady decline since Sunday when South Korea confirmed more than 60 cases for the third consecutive day.
Steelmaker POSCO declined 3.5 percent and Hyundai Motor gave up 1.3 percent, while internet giant Naver jumped 4 percent.
Commodities
Crude oil futures are falling $0.22 to $39.40 a barrel after tumbling $1.28 to $39.62 a barrel on Thursday. Meanwhile, after slumping $16.80 to $1,803.80 an ounce in the previous session, gold futures are climbing $11.10 to $1,814.30 an ounce.
On the currency front, the U.S. dollar is trading at 106.81 yen versus the 107.20 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1289 compared to yesterday’s $1.1284.
