Asian markets climb after Wall Street’s rally.
Financial markets across Asia rose on Thursday, carried by optimism overnight on Wall Street that a new drug could help to treat Covid-19.
In Tokyo, bullish traders lifted the Nikkei 225 up by 2.6 percent in morning trading. China’s Shanghai Composite gained 1.2 percent, while in Shenzhen stocks were up 1.6 percent. South Korea’s Kospi rose 0.7 percent. In Australia, the benchmark S&P/ASX 200 rose 1.8 percent. Hong Kong’s Hang Seng is closed for a holiday.
Wall Street and European markets looked poised for a positive day based on futures trading.
The rally in Asia was a continuation of a strong day on Wall Street, where the S&P 500 gained 2.7 percent and news from drugmaker Gilead Science that it had positive results from a trial for an antiviral drug known as remdesivir. It is being tested as a possible treatment for Covid-19.
This news was also a boon to Chinese drugmakers that make some of the ingredients in Gilead’s new drug.
Chinese markets were also given a boost by data about the services sector for the month of April, which was firmer than expected. But other data released still underscored the gap in demand for Chinese-made products overseas.
Broader positive sentiment was on display in commodities markets, too, as the price of oil continued a rally following news from Norway, a major oil producer, that it would limit production, something that will lift sagging prices. The price of the U.S. benchmark, the West Texas Intermediate, jumped 7.6 percent to $16.21, while Brent, the international benchmark, rose nearly 4 percent to $23.42 a barrel.
The yield on United States 10-year treasuries rose, buoyed by news from the Federal Reserve that it would keep rates close to zero for longer. The price of gold rose slightly.
Millions more jobless claims are expected to be reported on Thursday.
The number of new unemployment claims each week has been declining. But as the American economy continues to stagger under the weight of the coronavirus pandemic, that is scant comfort.
Another grim reckoning is expected Thursday at 8:30 a.m., when the Labor Department reports the tally of claims for last week. The consensus forecast cited by Bloomberg is 3.5 million, though some economists see a number closer to four million.
That would bring the six-week total to the cusp of 30 million jobless claims, despite trillions in stimulus spending and a rush to reopen shuttered businesses in some states.
Many state agencies still find themselves overwhelmed by the flood of claims, leaving perhaps millions with dwindling resources to pay the rent or put food on the table.
If anything, according to many economists, the job losses may be far worse than government figures indicate. A study by the Economic Policy Institute found that roughly 50 percent more people than counted as filing claims in a recent four-week period may have qualified for benefits but were stymied in applying or didn’t even try because they found the process too daunting.
“The problem is even bigger than the data suggest,” said Elise Gould, a senior economist with the institute, a left-leaning research group. “We’re undercounting the economic pain.”
Stocks rallied on Wednesday, bolstered by indications that a drug being tested as a possible treatment for Covid-19 could be showing progress, and as investors pinned their hopes on the gradual reopening of the world’s major economies.
The S&P 500 gained nearly 3 percent, while shares in Europe were also sharply higher.
The rally came despite data that showed the U.S. economy shrank in the first quarter of the year by the most since 2008. Earnings reports from Volkswagen, Samsung, Airbus, Boeing and other giant businesses were also grim.
But investors have been shaking off bad news on the economy for weeks as they focus on progress on efforts to contain the coronavirus pandemic. A steady climb has lifted the S&P 500 by more than 31 percent since its March 23 low. With nearly half that gain coming in April, the month is on track to be the best for stocks since 1974, according to data from Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.
The trading on Wednesday had all the hallmarks of a rally fueled by hopes of a return to normal, with shares of airlines and cruise operators — both industries that are dependent on the end of restrictions and the return of travelers — among the best-performing stocks in the S&P 500. Oil producers also rallied as the price of crude oil surged.
A rally in the stocks of large technology companies, which have an outsize impact on the overall market, also helped. Alphabet rose nearly 9 percent the day after it reported quarterly results that were better than expected, and Facebook was more than 6 percent higher.
Before trading began Wednesday, the drugmaker Gilead Sciences said it was “aware of positive data” emerging from a trial of its antiviral drug being conducted by the National Institute of Allergy and Infectious Diseases. The drug, remdesivir, is being tested as a treatment for Covid-19, the illness caused by the coronavirus.
Tesla on Wednesday reported a steep drop in net income in the first quarter compared with the previous quarter, as the coronavirus pandemic disrupted the electric-car maker’s operations in the United States and China, its two largest markets.
Elon Musk, the company’s chief executive, said the company would continue to face difficulties as long as it was forced to keep its plant in Fremont, Calif., closed under the state’s stay-at-home order.
“We are a bit worried about when we will be able to resume production in the Bay Area,” Mr. Musk said on a conference call with reporters.
He went on to say the stay-at-home order was “fascist” and amounted to “forcibly imprisoning people in their homes against all their constitutional rights.”
“They’re breaking people’s freedoms in ways that are wrong and are not why people came here or built this country,” he said.
California imposed the lockdown in March and required all nonessential businesses to close. But Tesla told employees at the Fremont plant to report to work unless they were sick, or to take vacation days if they stayed at home. The local sheriff’s office forced the company to obey the state order and close the plant.
Tesla’s plant in Shanghai has resumed production.
On Wednesday, the company reported $16 million in net income for the first three months of the year, a drop of 85 percent compared with the fourth quarter. Revenue in the quarter totaled $6 billion, a 20 percent drop from the previous quarter.
Tesla declined to offer guidance for the second quarter because of the uncertain economic and public health outlook. The company’s shares surged 10 percent after the market closed.
The deluge of first-quarter reports this week is giving investors a detailed look at how the start of the coronavirus crisis affected businesses. Of course, second-quarter earnings this year may well be even more grim.
Facebook cautioned Wall Street that it could face intensifying difficulties in its advertising business as the spread of the coronavirus ripples through the global economy, although the falloff in spending has stabilized. The company’s revenue in the first quarter rose 18 percent to $17.74 billion from a year earlier, while profit more than doubled to $4.9 billion, surpassing Wall Street estimates. A year earlier, Facebook had taken a $3 billion charge to pay for a privacy settlement with the Federal Trade Commission.
Microsoft reported strong growth in sales and profits for the quarter ended in March, saying that the coronavirus outbreak had “minimal net impact” on its financial performance. Revenue rose 15 percent to $35 billion, compared with the analysts’ consensus forecast of $33.66 billion. Its operating earnings per share rose 23 percent to $1.40 a share in the quarter. That was well above the average estimate of Wall Street analysts of $1.26 a share, as compiled by Refinitiv, a research firm.
Catch up: Here’s what else is happening.
FedEx said on Wednesday that it would not take federal funds earmarked to pay employees under the CARES Act, one day after UPS announced the same. Lawmakers had set aside $25 billion in grants for passenger airlines and $4 billion for cargo carriers to pay workers, though the Treasury Department later classified a portion of the funds for airlines as a loan.
Reporting was contributed by Nelson D. Schwartz, Alexandra Stevenson, Niraj Chokshi, Neal E. Boudette, Steve Lohr and Mike Isaac.