Wall Street reversed higher after a depressive start of the week. On Tuesday, all three indices secured gains after a volatile session. Investors’ risk appetite increased after Moderna published encouraging data on the most probable candidate for a COVID-19 vaccine. The results, published in the New England Journal of Medicine, claim that Moderna’s vaccine generated antibodies on the new coronavirus in all patients participating in a safety trial.
S&P 500 (+1.34), Dow Jones (+2.13%), and Nasdaq (+0.94%) reacted positively on the news, as investors hope that the vaccine would be imperative in fixing the coronavirus crisis.
As of today, the US stock market has mostly recovered from its March nosedive triggered by the coronavirus crisis. This has to do with the massive stimulus launched by the Fed and investors’ effort to price in a potential rapid recovery.
Asian stocks are now following the same bullish path, as investors welcome Moderna’s positive results. Nevertheless, until the vaccine passes through all safety checks, the number of coronavirus cases continues to increase at a rapid pace, with many regions returning to strict lockdown rules, which might hinder a V-shape economic recovery.
At the time of writing, Japan’s Nikkei 225 is up 1.60%. The Bank of Japan is scheduled to release its policy statement later today, though no changes are expected. Investors ignored a new COVID outbreak in Tokyo.
South Korea’s KOSPI is up 0.83% and the ASX 200 has increased by 1.76%.
However, Chinese equities are isolated from the bullish mood, as the political tension between the US and China is intensifying. On Tuesday, President Donald Trump signed a bill approved by the Congress to penalize banks and financial institutions dealing with Chinese officials who implement the new security law in Hong Kong. Trump ordered the end of Hong Kong’s special status in an effort to punish Beijing for the “oppressive actions” against the financial hub. The former British colony will be treated the same as Mainland China.
Hong Kong’s Hang Seng is now down 0.31% after an initial surge. China’s Shanghai Composite has declined by 0.75%, while the Shenzhen Component is down 1.60%.
European stocks will start the Wednesday session off on the right foot, as DAX and FTSE futures are up 0.70% and 1%, respectively.
In individual corporate news, JPMorgan Chase beat forecasts for second-quarter profits thanks to an increase in trading revenue, which surged over 77%. Bond trading alone accounted for over $7 billion as the Fed and central banks purchased government paper like crazy to support the economy. The share price of the largest US bank rose 2.2%. Citigroup also reported earnings and revenue that beat forecasts.
Elsewhere, the stock price of Wells Fargo dropped over 5% after the bank reported a larger-than-expected loss in the second quarter, announcing that it would cut the quarterly dividend by 80%. For Wells Fargo, this is the first quarterly loss after the financial crisis in 2008.
