Home Health Global stocks and oil prices rally on coronavirus drug hopes

Global stocks and oil prices rally on coronavirus drug hopes


A Chinese citizen undergoing testing for coronavirus while passing through a temporary corridor opened at a border checkpoint between Blagoveshchensk and Heihe. Temporary corridors are opened to return Russian and Chinese citizens to their countries as the Russian government orders to close the border with China as a measure to prevent the coronavirus spread. All the people passing through the temporary corridor are tested for the virus.

Svetlana Mayorova

Financial markets in Europe and the U.S. jumped Wednesday morning with traders reportedly buoyed by scientific efforts to treat the new coronavirus.

Early Tuesday, Sky News reported a “significant breakthrough” by scientists at Imperial College London in the U.K., who claim to have reduced a stage of the development time for a coronavirus vaccine from “two to three years to just 14 days.”

The lead scientist told the media outlet he would start testing it on animals as early as next week. Another separate media report out of China Wednesday claimed that researchers within the country had found two separate drugs that can inhibit the effect of the new strain of the coronavirus.

The report said preliminary tests on in-vitro samples were effective at inhibiting the coronavirus in the test tube, but did not specify successful treatment in people carrying the virus.

News agencies like Reuters and Dow Jones attributed the reports of progress to the sharp rise in stock markets, citing traders. CNBC has not been able to verify the media reports.

The Stoxx 600 index, which represents Europe’s largest-listed companies, extended gains throughout Wednesday morning, notching a 1% gain for the session, and was only two points from touching an all-time high.

U.S. futures also surged on the reports, with the Dow currently tipped to open around 280 points higher on Wednesday, breaching the 29,000-point mark. The S&P 500 and Nasdaq are also tipped to open with a surge.

A spokesperson for the World Health Organization (WHO) said “there are no known effective therapeutics” against the coronavirus, Reuters reported Wednesday. CNBC has contacted the WHO for comment but at time of publication had recieved no reply.

Now watch: Market set to rally at open

An upward revision to both U.K. and euro zone services and manufacturing data for January also boosted sentiment in equities. The move follows a blockbuster Tuesday session for Europe’s stocks which erased year-to-date losses.

Meanwhile, oil prices — weighed down in recent days by demand concerns — also rose. Brent crude futures were up by 2.5% at 10:30 a.m. London time, at $55.30 per barrel.

Stock trading strategist for Citigroup, Jimmy Conway, told CNBC Wednesday that the market is currently weighing the economic impact of the coronavirus against increased liquidity coming from China.

“Anything that limits that economic impact is going to be taken well, as the liquidity is likely to remain in place until well after the virus has been contained,” Conway said via email.

The Citigroup strategist said European stocks were also benefiting from improved the Purchasing Managers’ Index (PMI) data on Wednesday that backed up early signs of stronger corporate profits.

He said any sign of a reduced impact from the coronavirus would see markets settle back to a more familiar scenario where improving economic activity was being underpinned by the European Central Bank’s current stimulus package.

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