The Wednesday Market Minute
- U.S. stocks surge on reports of a breakthrough treatment for patients infected by the deadly coronavirus.
- China continues to grapple with the deadly disease and U.S. investors focus on domestic politics ahead of President Trump's Senate trial verdict.
- Coronavirus cases near 25,000, with just under 500 deaths, as the disease continues to spread through Huebi Province; 270 cases in 24 nations outside China have also been confirmed.
- President Donald Trump focuses on "the great American comeback" in his third State of the Union address, but Democratic reaction underscores bitter partisan divide heading into election year.
- Iowa Democrats publish partial caucus results, with Joe Biden a distant third to early leaders Pete Buttigieg and Bernie Sanders
- U.S. equity futures suggest a modestly weaker open on Wall Street ahead of General Motors, Humana and Merck & Co. before the start of trading.
Dow futures surged higher Wednesday, while global stocks rallied and oil prices gained, following media reports from China of a possible breakthrough in treatment for patients infected by the deadly coronavirus.
Researchers at Zhejiang University were reported to have found a drug that will effectively treat patients suffering from the virus -- a respiratory-focused ailment that presents with symptoms similar to that of pneumonia -- which has killed nearly 500 people and infected nearly 25,000 more.
U.S. equity futures revered earlier declines on the reports, with contracts tied to the Dow Jones Industrial Average now indicating a 280 point gain and those linked to the S&P 500 suggesting a 28 point jump for the broader benchmark.
Futures were also bolstered by a private sector reading of January job creation, which showed employers added a net new 219,000 positions to U.S. payrolls, well ahead of the consensus forecast of a 156,000 gain. The Labor Department will publish official January figures before the market opens on Friday.
European stocks were also on the rise in London and Frankfurt, with the Stoxx 600 benchmark swinging to a 1.22% gain and Britain's FTSE 100 rising 0.77% even as the pound gained ground to 1.3050 against the U.S. dollar, pressuring stocks on the index that earn revenues outside of the United Kingdom.
Prior to the drug breakthrough reports, global stocks were trading only cautiously higher as health authorities in China continued to struggle with the spread of the deadly coronoavirus and U.S. investors focus on the bitter political tensions at home and ahead of today's Senate impeachment verdict of President Donald Trump.
Nearly 500 people have died from the coronavirus since it was identified as passing from animals to humans at an illegal wildlife market in the central industrial city of Wuhan.
Yesterday's fatalities -- which hit 65, the highest since the outbreak -- have raised questions over the efficacy of China's response, as has the rise of the number of confirmed cases, to just under 25,000. However, a pointed and systematic effort to support financial markets, and limit the economic impact of the virus, has steadied stocks in China and around the region.
U.S. markets, meanwhile, are also looking to parse through partial results from Monday's Iowa caucuses and await the Senate verdict on President Donald Trump's impeachment trial later today.
Trump, for his part, struck a defiant tone in his third State of the Union speech last night, touting what his speechwriters deemed "the great American comeback" in a 78-minute address that focused on economic achievements over the President's impeachment and censure.
"The state of our union is stronger than ever before," Trump told lawmakers. "In just three short years we have shattered the mentality of American decline and we have rejected the downsizing of America's destiny."
Images of Democratic House Leader Nancy Pelosi ripping up pages of the President's speech as Republican lawmakers took to their feet to applaud his address, however, only underscore the country's bitter partisan divide and remind investors that there is little chance of policy progress of any kind between now and the end of the year.
Overnight in Asia, China's ongoing stimulus, which includes targeted rate cuts for the banking sector and some $225 billion in liquidity injections, helped the Shanghai Composite to a 1.25% gain on the session, while a modestly weaker yen helped lift the Nikkei 225 in Japan to a 1% gain that brought the benchmark back over the 23,000 point mark.
Global oil prices were also market higher in early European trading, with dealers citing talk of a new series of OPEC production cuts, possibly as early as this month, as well as the reports of a drug breakthrough offsetting both the presumptive decline in China demand and the ongoing rise in domestic U.S. crude stocks.
That said, oil remains firmly in bear market territory -- with prices more than 20% lower from their early January peak -- as a result of the selloff linked to the economic impact of China's coronavirus outbreak.
Brent crude futures contracts for April delivery, the global benchmark for pricing, were last see seen $1.59 higher from their Tuesday close in New York and trading at $55.55 per barrel, while WTI contracts for the same month were seen $1.34 higher at $50.95 per barrel.