Asian stocks are lower Friday after an early rally on Wall Street suddenly disappeared, the latest example of how fragile the hope supporting the months-long recovery of the stock market is.
The Japanese benchmark Nikkei 225 fell 0.8% in the morning trade to 19,270.04. The South Korean Kospi lost 0.7% to 1,901.09, while the Australian S & P / ASX 200 rose 0.4% to 5,239.50. Hang Seng in Hong Kong fell 0.5% to 23,860.76, while the Shanghai Composite was 2,823.29, also down 0.5%.
Investor sentiment returned to vulnerability as the focus shifted again to the economic damage the world would likely suffer as a result of the pandemic, say Prakash Sakpal and Nicholas Mapa, economists at ING.
“Investors will continue to monitor developments on the Covid-19 front with a setback in clinical trials for treatment against the virus. Meanwhile, the US has launched a new round of stimulation as oil prices rose slightly,” they said in a comment.
On Wall Street, the S&P 500 turned between gains and losses, ending the day with 0.1%. It is a microcosm of the extreme fluctuations that have gripped the markets for months as investors struggle to set prices where corporate profits and the economy will be in months.
The S&P 500 slipped a third of its record in February to a month ago, and has since cut its losses in half by a series of vague hopes – from reopening companies, from government support to mitigate economic pain and from potential treatments for Covid – 19.
A report by the Financial Times on Thursday afternoon interrupted that third hope. A potential antiviral drug was said to flop in a clinical trial, citing documents accidentally published by the World Health Organization.
However, research said the sample size was too small to draw scientifically valid conclusions and was terminated prematurely. The Foster City, California-based company behind the drug, Gilead Sciences, said the data represents “inappropriate characteristics” of the Chinese study.
Gilead’s shares went from a 3.3% profit to a 4.3% loss after the report. It also helped topple the market.
The S&P 500 finished at 2,797.80, down 1.51 points. The Dow Jones Industrial Average rose 39.44 points, or 0.2%, to 23,515.26 after losing almost a gain of 409 points. The Nasdaq composite fell 0.63 points to 8,494.75.
“We can expect – even if we are optimistic and see signs of progress in treatment, testing and vaccines – that there will be some forward and some downturn,” said Nela Richardson, investment strategist at Edward Jones.
She said investors are still being encouraged by signs of progress in some places seeing fewer new patients and deaths.
“The risk is that these fundamental factors we are seeing now are dastardly, just awful and reflect the fact that the economy is really stopping suddenly, taking longer than what the markets currently expect,” she said. “That uncertainty creates volatility, even if the overall trajectory in the market is positive.”
Among the cowardly numbers arriving Thursday: preliminary data on manufacturing and services activities in Europe and the United States was even weaker than economists expected, as well as a report on new US home sales. The headliner, however, was the loss of jobs. Another 4.4 million US workers filed for unemployment benefits last week, bringing the total to 26 million, or about one in six US workers, in the past five weeks.
Analysts said investors may have found encouragement from a dip from last week’s $ 5.2 million or looking past the bleak data as they fully expected it.
“Short-term figures, when reported, are almost a sigh of relief that they are no higher,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
The US crude benchmark rose 68 cents to $ 17.18 a barrel. It rose 19.7% to settle with $ 16.50 a barrel. It has recovered after falling below $ 12 on Monday, although it remained well below the roughly $ 60 level that started the year. Brent crude, the international standard, rose 49 cents to $ 21.82 a barrel.
The dollar rose from 107.50 yen on Thursday to 107.64 yen. The euro fell from $ 1.0777 to $ 1.0768.
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