The Wednesday Market Minute
- Global stocks rally on coronavirus vaccine progress, but rising U.S.-China tensions keep gains in check.
- Moderna says mRNA-1273 vaccine trial triggers antibody reaction in all 45 participants, opening door for a wider study.
- President Donald Trump ends Hong Kong's special status, provoking threat of retaliation from China.
- U.S. bank earnings on tap Wednesday following stronger-than-expected reports from JPMorgan and Citigroup Tuesday.
- Apple wins a key European tax ruling on $15 billion in back taxes allegedly owed to the Republic of Ireland
- U.S. equity futures suggest a firmer open on Wall Street after stronger-than-expected second quarter earnings from UnitedHealth and Goldman Sachs.
U.S. equity futures extended gains Wednesday, while the dollar fell to a one-month low against its global currency peers, as investors reacted to progress on an experimental coronavirus vaccine while keeping a close eye on the suddenly rising political tensions between Washington and Beijing.
Moderna Inc. (MRNA) - Get Report said late Tuesday that its mRNA-1273 coronavirus vaccine candidate triggered antibody reactions -- with some mild side-effects -- in all of the 45 patients involved in an early, peer-reviewed study.
A further 30,000 volunteers will participate in a larger test of the candidate later this summer, but Moderna's progress, which was hailed by NIAID director Dr. Anthony Fauci, added to market optimism linked to the virus following data from a Pfizer (PFE) - Get Report study earlier this week and developments in Gilead Sciences' (GILD) - Get Report remdesivir treatment.
The good news, however, was partly shrouded by the fact that coronavirus cases in the U.S. have topped 3.4 million, with around 137,000 fatalities, with numbers continue to spike in states such as Florida, Texas and California.
Investors were also unsettled by President Donald Trump's decision last night to end the so-called special status conferred on Hong Kong, a move that affects some 1,300 American companies doing business in the protectorate and provoked a strong reaction from Beijing, which again accused Washington of meddling in its affairs.
Trump also took a swipe at China's handling of the coronavirus outbreak, which originated in the central industrial city of Wuhan, in remarks that some have interpreted as putting the phase 1 trade deal between the two economies at risk.
"Make no mistake. We hold China fully responsible for concealing the virus and unleashing it upon the world. They could have stopped it, they should have stopped it," Trump told reporters at the White House Tuesday. "It would have been very easy to do at the source, when it happened."
Stocks look set to kick-off another busy earnings session on a positive note, however, following stronger-than-expected second quarter reports from JPMorgan (JPM) - Get Report and Citigroup (C) - Get Report yesterday, with contracts tied to the Dow Jones Industrial Average indicating a 520 point opening bell gain and those linked to the S&P 500, which briefly edged into positive territory for the year earlier this week, suggesting a 39 point advance.
Goldman Sachs Group Inc. (GS) - Get Report shares jumped 4.2% in pre-market trading after it posted much better-than-expected second quarter earnings as it followed Wall Street rivals with a surge in trading revenues linked to market volatility during the peak of the coronavirus pandemic.
Apple Inc. (AAPL) - Get Report shares were another notable early-market mover, rising 2.12% -- and adding 60 points to the Dow -- after Europe's second-highest court ruled in favor of the tech giant in a long-running battle over $15 billion in unpaid taxes.
The U.S. dollar index, which tracks the greenback against a basket of six global currency peers, fell 0.4% in overnight trading to a one-month low of 95.867, thanks in part to optimism of a near-term corronavirus vaccine, and more signals of a positive outcome on a European rescue package at an EU summit in Brussels later this week, which lifted the euro to a multi-week high of 1.1440.
European stocks also followed the currency higher, with the Stoxx 600 benchmark rising 1.75% in early trading in Frankfurt, while Britain's FTSE 100 added 1.7% in London , paced by index heavyweight drugmakers GlaxoSmithKline (GSK) - Get Report and AstraZeneca (AZN) - Get Report
Oil prices were also on the move Wednesday following data from the American Petroleum Institute late Tuesday that showed an 8.3 million barrel decline in domestic crude stocks, a much bigger-than-expected fall that suggests improving demand in the world's second-largest energy market.
WTI contracts for August delivery, the U.S. benchmark, traded 60 cents higher from their Tuesday close in New York and were changing hands at $40.89 per barrel in early European dealing while Brent contracts for August, the global benchmark, were seen 56 cents lower at $43.46 per barrel.
Overnight in Asia, China stocks shed around 1.6% in Shanghai amid the rising Sino-U.S. tensions -- which included President Trump taking personal credit for Britain's decision to ban Huawei Technologies from its 5G infrastructure projects -- but those declines were offset by gains around the region, which helped lift the MSCI ex-Japan benchmark 0.75% higher heading into the final hours of trading.
Japan's Nikkei 225, meanwhile, jumped 1.6% in a follow-on rally from Wall Street to end the session at just under 23,000 points.