U.S. Stock-Index Futures Advance on Dip-Buying After Rout
U.S. stock-index futures rose in Asia as some investors deemed that Monday’s equity rout brought prices to attractive levels.
(Bloomberg) -- U.S. stock-index futures rose as some investors deemed that Monday’s equity rout brought prices to attractive levels amid speculation that a drug to treat the novel coronavirus may be on the horizon.
S&P 500 Index futures contracts expiring in March rose 0.2% at 10:34 a.m. in London, while contracts climbed 0.1% for the Dow Jones Industrial Average and advanced 0.3% for the Nasdaq 100.
In Europe, the Stoxx 600 Index erased earlier gains and fell 0.8%, with carmakers being the worst perfomers and banks also underperforming.
All three main U.S. stock benchmarks fell more than 3% Monday on growing concern that the coronavirus is spreading more widely outside China. The S&P 500 fell the most since February 2018 and now has declined three straight days, its longest losing streak since December. U.S. stocks have lost about $1 trillion in value in the past two sessions. Japan’s stock market, which was closed Monday, also slid more than 3% Tuesday.
“U.S. futures are going up a little on expectations dip buyers might emerge,” said Nader Naeimi, the head of dynamic markets at AMP Capital Investors Ltd. in Sydney. News of a possible treatment for the coronavirus also is helping, Naeimi said.
Chinese authorities said they will release results at the end of April from clinical trials of a Gilead Sciences Inc. drug that is emerging as a frontrunner in the race to find an effective treatment for the novel coronavirus. Gilead climbed 2.7% in U.S. pre-market trading.
Japanese newspaper Yomiuri Shimbun reported over the weekend that the government plans to recommend FujiFilm Holdings Corp.’s Avigan tablets for treating the coronavirus.
Separately, U.S.-based Moderna Inc. said it sent the first batch of its vaccine to the National Institute of Allergy and Infectious Diseases to be used in the planned Phase 1 study in the U.S. Moderna soared 20% in pre-market trading.
The Moderna report could have helped the rally in futures, according to Nick Twidale, general manager of IC Markets in Sydney. “It looks like a tentative first step in the right direction, but this will help markets,” he said.
The S&P 500 could continue to see corrective moves, with price action “highly susceptible to virus-related headlines as fears ebb and flow,” said Saxo Capital Markets’s Eleanor Creagh.
“At present, we want to maintain optionality and hedge against these elevated tail risks,” said Creagh. “Namely, the impact of the coronavirus outbreak being far greater than is currently discounted across equity markets. This includes buying puts, remaining long gold, U.S. fixed income and volatility/volatility proxies that benefit from market turmoil.”
--With assistance from Abhishek Vishnoi and Macarena Munoz.
To contact the reporter on this story: Shoko Oda in Tokyo at soda13@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie
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