Global Equities Dip But Remain On Pace For Best Month On Record

New York: World equity benchmarks dipped on Thursday yet remained on pace for their best month on record as a rebound in oil prices, encouraging early results from a COVID-19 treatment trial and expectations of more government stimulus helped ease the pain of February and March.

Safe-haven assets including the dollar and government bonds rose, reflecting an unsettled market as concerns about containing the coronavirus pandemic and jobs data in the United States were worse than expected.

“It’s a hope-based rally rather than an evidence-based rally,” said Anthony Doyle, cross-asset specialist at fund manager Fidelity International in Sydney.

There were still worries about a second wave of infections, Doyle said, adding that huge piles of cash waiting to go back into the markets suggest investors remained nervous.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.79% following broad losses in Europe and gains in Asia that pushed Japan's Nikkei .N225 to a seven-week high.

The index is on pace for its best month since it launched in the late 1980s..

In midday trading on Wall Street, the Dow Jones Industrial Average .DJI fell 326.94 points, or 1.33%, to 24,306.92, the S&P 500 .SPX lost 32.44 points, or 1.10%, to 2,907.07 and the Nasdaq Composite .IXIC dropped 38.93 points, or 0.44%, to 8,875.78.

“We have gone back to a turbo-charged version of the great financial crisis,” said Simon Fennell, a portfolio manager in William Blair’s global equity team, referring to how markets have surged on mass central bank and government stimulus.

Declines in the equity market came on the heels of a strong finish on Wall Street Wednesday after partial results from a trial of Gilead’s (GILD.O) antiviral drug remdesivir suggested it could help speed recovery from COVID-19, the respiratory disease caused by the new coronavirus.

Partial results from the 1,063-patient U.S. government trial of Gilead’s remdesivir were hailed as “highly significant” by the top U.S. infectious disease official, Anthony Fauci.

But since treatment hopes do not seem to take into account regulatory and distribution difficulties, should a treatment be found, currency and bond markets were more circumspect.

“Any positive medical development is helpful,” said Westpac FX analyst Sean Callow. “But no one should be counting on a major breakthrough. The key for markets is control of the spread of the virus.”

A rise in U.S. unemployment claims helped bolster safe haven assets. Benchmark 10-year notes last rose 12/32 in price to yield 0.5904%, from 0.627% late on Wednesday.

Initial claims for state unemployment benefits totaled a seasonally adjusted 3.839 million for the week ended April 25, the U.S. government said. That was down from 4.442 million in the prior week.