- Dow Jones Industrial Average (DJIA) futures soared on Tuesday.
- Traders are turning up their risk appetite on news of a breakthrough coronavirus antibody treatment.
- California and New York cautiously move to end lockdowns and Trump backs off his China pressure.
A flurry of positive news looks set to propel the stock market higher at the open today. Dow Jones Industrial Average (DJIA) futures were up 180 points in early trading.
It’s a welcome bounce after a lacklustre start to the month of May. So what’s the catalyst behind today’s rip higher? Well, there are five…
1. Breakthrough coronavirus antibody treatment boosts the Dow
Scientists published a breakthrough report last night which could be a game-changer for the coronavirus outbreak. Researchers claim they’ve created an antibody that can destroy the virus.
For the science-minded among us, it’s a monoclonal antibody – created in a lab using genetically modified mice. A similar process has been used to create effective cancer treatments.
The antibody is still in the early stages. It will need to go through strict animal trials, then human trials, before getting the all-clear. But the sheer volume of potential Covid-19 treatments and vaccines is helping buoy the stock market recovery.
2. White House backs down on China tension
Traders took a step back from stocks yesterday as it looked like Trump might re-ignite the trade war. The president accused China of covering up the coronavirus and threatened to kill the trade deal.
But the White House struck a softer tone late last night, assuring investors that Washington isn’t looking to punish Beijing for the outbreak. Deputy national security advisor Matthew Pottinger confirmed:
The U.S. isn’t looking at punitive measures here.
Still, that doesn’t mean the threat has disappeared. One former White House trade negotiator, Clete Willems said tensions were icy.
I do think we have to be honest and call this what it is and this is the start of a new Cold War.
3. New York and California slowly re-open
Perhaps the biggest boost for the Dow Jones this morning comes from California and New York state governors. Newsom and Cuomo outlined plans to tentatively ease the lockdowns in their respective states. Cuomo outlined a four-phase blueprint for coming out.
[Lockdowns are] not a sustainable situation… You can do it for a short period of time, but you can’t do it forever.
The state of New York will remain in lockdown until May 15th. But after that, Cuomo will phase in economic activity. Construction and manufacturing will return in phase one alongside some curb-side retail. Professional services, restaurants, bars, and eventually cinemas will follow.