Stock benchmarks in the Asia-Pacific region rose, while S&P 500 stock futures traded higher, pointing to a strong session for U.S. shares on Friday.
Market watchers said a range of factors helped power the rally, including the prospect of the U.S. gradually getting back to work and some encouraging news on potential treatments for the new coronavirus. Investors were able to look past data showing an unprecedented—but widely expected —plunge in Chinese economic activity.
In early-afternoon trading in Hong Kong, E-mini S&P 500 futures gained more than 3%. Australia’s S&P/ASX 200, Japan’s Nikkei 225 and South Korea’s Kospi rose by about 2% to 3% each, and the Shanghai Composite Index added 0.9%, while Hong Kong’s Hang Seng Index advanced 2.3%.
Andy Maynard, managing director of equities sales and trading at China Renaissance Securities, said news about possible coronavirus treatments had buoyed markets. He said that while effective drugs might take years to develop, the developments were catalysts to say the situation isn’t as bad as feared and that markets would recover.
Shares of Gilead Sciences rose 15.1% in late U.S. trading after a report that one of its experimental drugs might be performing well in clinical trials of patients with Covid-19, the respiratory disease caused by the new coronavirus.
Ben Luk, senior multiasset strategist at State Street Global Markets, said other factors were also boosting sentiment in regional markets. Those included the prospect of the U.S. gradually reopening its economy and better-than-expected export figures from Singapore.
Singapore said Friday that exports, excluding oil, rose 17.6% in March from a year earlier, far better than the median 7.9% contraction forecast in a Wall Street Journal poll of 11 economists. “There’s more comfort that China continues to recover based on those export numbers,” Mr. Luk said.
Markets remained strong even as official statistics showed China’s economy shrunk 6.8% from a year earlier in the first quarter. That was the first year-over-year contraction since Beijing began reporting the quarterly figure in 1992, but it was less sharp than the 8.3% median forecast of economists polled by The Wall Street Journal.
“Everybody was expecting a very bad first quarter,” said Chi Lo, senior economist for Greater China at BNP Paribas Asset Management. Mr. Lo said the Chinese government’s goal of doubling the economy in size from 2010 to 2020, in real terms, or after adjusting for inflation, is now out of reach.
He added that the speed with which China’s economy returned to full strength would depend partly on how badly the pandemic hit overseas demand for its goods and services.
In the U.S., President Trump released new federal guidelines on reopening the economy that would leave decision-making largely up to governors. Mr. Trump said: “We must have a working economy, and we want to get it back very, very quickly.”
The Dow Jones Industrial Average and the S&P 500 on Thursday posted modest gains even after data showed another sharp rise in Americans seeking jobless benefits, and slumping construction of new homes.
Globally, confirmed cases of the new coronavirus reached nearly 2.2 million, with the U.S. accounting for nearly one-third of the cases, according to data from Johns Hopkins University. The number of deaths world-wide has topped 143,000.
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