The major Asia-Pacific shares jumped on Thursday with buyers primarily influenced by positive developments related to a potential new treatment for COVID-19, while shrugging off China’s manufacturing data misses. Meanwhile, the Federal Reserve on Wednesday delivered as expected, pledging to keep rates near zero for as long as needed and provide additional help to the economy.
On Thursday, Japan’s Nikkei 225 Index settled at 20193.69, up 422.50 or +2.14%. Hong Kong’s Hang Seng Index closed at 24643.59, up 67.63 or +0.28% and South Korea’s KOSPI Index finished at 1947.56, up 13.47 or +0.70%.
In China, the Shanghai Index settled at 2860.08, up 37.64 or +1.33%, while Australia’s S&P/ASX 200 Index closed at 5522.40, up 129.00 or +2.39%.
Upbeat Coronavirus News Boosts Appetite for Equities
Falling infection rates and phased reopening of economies around the globe have boosted appetite for equities this week, with early results from a U.S. government clinical trial showing that Gilead Sciences Inc’s experimental drug remdesivir helped certain COVID-19 patients recover more quickly.
The company said Wednesday preliminary results of a coronavirus drug trial showed at least 50% of patients treated with a five-day dosage of remdesivir improved and more than half were discharged from the hospital within two weeks.
Later Wednesday, White House health advisor Dr. Anthony Fauci said NIAID’s remdesivir drug trial, which enrolled about 800 patients, showed “quite good news” and that the drug would set a new standard of care for COVID-19 patients.
China Manufacturing Sector Dips on Slowing Global Demand
China’s manufacturing sector has been hit by slowing export demand due to the economic impact from the global coronavirus pandemic even as factories in the world’s second-largest economy resumed production, two sets of April data released on Thursday showed.
Despite the setback, investors shrugged off the news as it was likely already priced into the market. When looking at these reports, remember that bad numbers are expected so better-than-forecast results will generate a positive response from the markets. The bad news is more than likely baked into the markets.
Results of a private survey, the Caixin/Markit manufacturing Purchasing Manager’s Index (PMI), for April was 49.4 – in contractionary territory. Analysts polled by Reuters had expected the Caixin/Markit manufacturing PMI to come in at 50.3, compared with 50.1 in March.
Meanwhile, China’s National Bureau of Statistics said manufacturing activity in the country expanded slightly, reporting official manufacturing PMI of 50.8 for the month of April, as compared to 52.0 in March. Analysts polled by Reuters had expected official manufacturing PMI to come in at 51.0 in April.