Global stocks fell after a potential antiviral drug to treat coronavirus flopped in its first clinical trial, dashing investors’ hopes for a quick medical solution to the pandemic.
The declines in markets in Asia and the US followed a report in the Financial Times that a Chinese trial of remdesivir did not improve the condition of patients or reduce the pathogen’s presence in the bloodstream.
Wall Street’s S&P 500 closed 0.1 per lower overnight following the report, reversing gains of as much as 1.6 per cent. Shares in California’s Gilead Sciences, remdesivir’s developer, fell 4 per cent on Thursday.
In Asian trading on Friday, investors sold off shares in Gilead’s partner companies in China. Shenzhen-listed Porton Pharma, which makes drug ingredients, fell by the exchange’s 10 per cent daily trading limit after having doubled since the start of the year. Hainan Haiyao, another drug company, dropped as much as 5 per cent. Zhejiang Yongtai Technology, a maker of pharmaceutical raw ingredients, tumbled as much as 9.8 per cent.
The falls helped take the Shanghai Composite index down more than 1 per cent, while the broader CSI 300 index slipped 0.7 per cent, even after the country’s central bank trimmed one of its policy rates.
The disappointment over the development of a possible treatment came as the number of confirmed deaths globally from the coronavirus pandemic surpassed 176,000 with infections now above 2.6m.
Investors “should expect more volatility across all asset classes as we try to appropriately price in something we have never experienced before”, said Hannah Anderson, global market strategist at JPMorgan Asset Management, of the future path of the outbreak.
Futures tipped Wall Street’s S&P 500 to drop another 0.7 per cent when trading begins later in the day. London’s FTSE 100 was expected to open 1.5 per cent lower.
Elsewhere on Friday, Japan’s benchmark Topix index fell 0.7 per cent while South Korea’s Kospi index slipped 1.5 per cent. Hong Kong’s Hang Seng was down 0.3 per cent.
Traders in China are also becoming nervous ahead of the country’s long Labour Day holiday at the start of May, which is unlikely to provide its usual boost to consumption as Chinese avoid unnecessary travel. The period could prove to be a litmus test for how China’s consumer economy is performing after the country brought its outbreak under control.
“People are hedging . . . we need to know whether Chinese domestic demand performs well,” said Ronald Wan, chief executive at Partners Capital in Hong Kong.
Meanwhile, oil capped off a frenzied week of trading on a high after signs that global producers were beginning to choke supply.
US oil prices were higher after having fallen into negative territory for the first time this week. US marker West Texas Intermediate added 4.8 per cent to $17.29 a barrel, while international benchmark Brent crude climbed 3.9 per cent to $22.16.
The gains for oil came after it was reported that producer Kuwait had started reducing output ahead of planned cuts by Opec suppliers that are set to begin on May 1.
However, the relief rally in oil was unlikely last “as productions cuts are unlikely to match [the] demand halt” caused by Covid-19, said JPMorgan’s Ms Anderson.