Asian stocks set to track U.S. gains as virus treatment hopes lift confidence

Economy
© Reuters. People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo © Reuters. People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo

By Chibuike Oguh

NEW YORK (Reuters) – Asian equity markets were poised to gain on Thursday, tracking Wall Street’s rally after positive trial results of an experimental COVID-19 treatment, a U.S. Federal Reserve pledge to shore up the economy and a jump in oil prices.

A top U.S. health official said Gilead Sciences Inc ‘s (O:) antiviral drug remdesivir is likely to become the standard of care for COVID-19 after early results from a clinical trial showed it helped certain patients recover more quickly.

Investors expect the ensuing virus treatments to be critical in helping countries emerge from self-imposed lockdowns aimed at curbing the outbreak.

“The markets were up on expectation of the Gilead drug meeting the clinical end point, more regional re-opening in the U.S., and backstopping by the Fed after the chairman said that it will be overly accommodative,” said Thomas Hayes, chairman of Green Hill Capital.

Australian S&P/ASX 200 futures were up 2.02%, while Japan’s () were down 0.2% at 23:00 GMT.

The Nikkei 225 index () closed down 0.06% at 19,771.19​​​ on Tuesday. The futures contract is up 3.26% from that close.​ Japanese markets were closed for a public holiday on Wednesday. Hong Kong’s Hang Seng index futures () .HSIc1> were up 1.01%.

The U.S. economy suffered its sharpest decline in 11 years, with first-quarter gross domestic product contracting 4.8%, marking the end of the longest U.S. economic expansion on record.

At the conclusion of its two-day monetary policy meeting, the Fed left key interest rates near zero while Chair Jerome Powell warned the economy would drop at an “unprecedented rate” in the current quarter.

However, Powell also said the economy would pick up as restrictions were lifted and vowed the central bank would continue to support the recovery.

On Wall Street, the Dow Jones Industrial Average () rose 2.21%, the S&P 500 () gained 2.66% and the Nasdaq Composite () added 3.57%.

The safe-haven dollar took a hit from rising risk appetite and the Fed’s pledge to shore up the U.S. economy.

The , tracking the greenback against six major peers (), fell 0.3%, with the euro () up 0.5% to $ 1.0872. Benchmark U.S. 10-year notes () fell 2/32 in price to yield 0.6143%, down from 0.61% late on Tuesday.

Oil prices surged more than 10% after stockpiles grew less than expected and gasoline posted a surprise draw, feeding optimism that fuel consumption would recover as some European countries and U.S. states ease coronavirus lockdowns.

U.S. West Texas Intermediate (WTI) crude futures settled at $ 15.06 a barrel, jumping $ 2.72, or 22%. futures settled at $ 22.54 a barrel, up $ 2.08, or 10.2%.

In Europe, automakers shares () were lifted after German carmaker Daimler (DE:) forecast operating profit at its Mercedes-Benz Cars (NYSE:) & Vans division above the prior-year level and rival Volkswagen (DE:) said it expected to be profitable on a full-year basis..

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