Coronavirus treatment hopes lifts global stocks
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[August 24, 2020]
By Karin Strohecker
LONDON (Reuters) - Equity markets gained
for a second straight session on Monday as hopes for a coronavirus
treatment boosted risk assets and markets geared up for the U.S. Federal
Reserve's annual Jackson Hole meeting later in the week.
Europe's pan-regional STOXX 600 rose 1.3% and the global benchmark added
0.4% after U.S. regulators authorised the use of blood plasma from
recovered patients as a treatment option.
The rises follow healthy gains in Asia, where MSCI's broadest index of
Asia-Pacific shares ex-Japan jumped 0.8% to flirt with a six-month high
touched last week and Japan's Nikkei added 0.3%.
U.S. futures indicated gains on Wall Street ahead, raising the prospect
of record highs for the S&P 500.
Markets latched onto an announcement from the U.S. Food & Drug
Administration for an "emergency use authorisation" which will allow the
use of blood plasma from patients who have recovered from COVID-19 as a
treatment for the disease.
"Whenever there is any news that is seen as something that is helping
the battle against coronavirus it gives a boost to sentiment," said
Shane Oliver, Sydney-based chief economist at AMP.
Equity market sentiment was also supported by a Financial Times report
that the Trump administration is considering by-passing normal U.S.
regulatory standards to fast-track an experimental coronavirus vaccine
from the UK for use in the United States before the presidential
election in November.
Yet rising infection numbers in various parts of the world, especially
Europe, cast a cloud over the latest gains, analysts said.
"In spite of its relative success in suppressing the first wave of the
virus, it’s Europe that’s begun to re-emerge as a source of concern in
recent days given the latest rises in case numbers, a trend that
continued through the weekend," said Henry Allen at Deutsche Bank.
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The London Stock Exchange Group offices are seen in the City of
London, Britain, December 29, 2017. REUTERS/Toby Melville
Looming large over this week was an address by Federal Reserve Chair
Jerome Powell at the Kansas City Fed Jackson Hole symposium, where
he will speak on the Fed’s monetary policy framework review.
"Fed chair Powell will speak (virtually) on the Fed’s Policy
Framework Review, and we see a possibility for the Fed to shift to
an average inflation target or at the least change its wording
regarding inflation overshooting the target," SEB's Lina Fransson
said in a note to clients.
The risk-on mood also filtered through to fixed-income markets with
safe-haven German bond yields ticking up after falling for six
consecutive sessions last week, the longest decline since January. [GVD/EUR]
In currency markets, the dollar index slipped and the dollar
weakened against the safe-haven Japanese yen at 105.83. The British
pound held steady at $1.3090 after declining 0.9% on Friday on lack
of progress in post-Brexit trade talks with the European Union. The
euro was at $1.1800 after falling 0.5% on Friday following
disappointing manufacturing activity data.
Storms bearing down on the Gulf of Mexico, shutting more than half
its oil production, helped push up crude oil futures. Brent rose 26
cents to $44.61 a barrel and U.S. crude climbed 24 cents to $42.58.
[O/R] Gold recovered from early losses to trade 0.4% higher at
$1,947.20 an ounce.
(Reporting by Karin Strohecker in London, additional reporting by
Swati Pandey in Sydney; editing by Larry King)
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