GLOBAL stocks surged yesterday on optimism about the easing of coronavirus lockdowns and promising preliminary clinical results of a Covid-19 vaccine candidate, while the euro gained on a French-German agreement to support the eurozone economy.

The positive developments produced one of the best days for global markets since the Covid-19 crisis, lifting major European indices by more than 5%, boosting the Dow by nearly 4% and pushing US oil prices above US$30 (RM132) a barrel for the first time since mid-March.

“It has been a very optimistic start to the new week with stocks, crude oil, copper, gold and silver all pushing higher,” said Fawad Razaqzada at ThinkMarkets.

After large parts of the global economy shut down earlier this year to combat the coronavirus, there were fresh signs of a transition towards normalcy.

St Peter’s Basilica in the Vatican reopened, along with the Acropolis in Athens. In the United States, the “Big Three” Detroit automakers resumed manufacturing, while the states of California and New York moved towards resuming pro sports without spectators.

“As lockdown easing progresses, investors continue to value companies as if the global economy has already hit its low point,” said Jasper Lawler at London Capital Group.

Progress towards vaccine

Sentiment was also boosted by a press release from US biotech firm Moderna that reported “positive interim” results in the phase 1 test of a vaccine candidate.

Moderna reported promising early results yesterday from the first clinical tests of an experimental vaccine against the novel coronavirus performed on a small number of volunteers.

The Cambridge, Massachusetts-based company said the vaccine candidate, mRNA-1273, appears to produce an immune response in eight people who received it similar to that seen in people convalescing from the virus.

“These interim phase 1 data, while early, demonstrate that vaccination with mRNA-1273 elicits an immune response of the magnitude caused by natural infection,” said its chief medical officer, Tal Zaks.

“These data substantiate our belief that mRNA-1273 has the potential to prevent Covid-19 disease and advance our ability to select a dose for pivotal trials,” Zaks said.

A phase 3 trial, the largest and most important to validate the efficacy of a vaccine, should begin in July. Shares of Moderna shot up 20%.

Briefing.com said “caution” was needed given that the testing is still so preliminary, but added that “today’s news is a key step to getting back to normal”.

Moderna’s announcement lifted the market generally but had an especially beneficial impact on companies in travel, entertainment and other sectors that have been hit hardest by the Covid-19 shutdown.

This group included United Airlines, up 21.1%, Marriott International, up 17.4%, live events company Live Nation, up 15.2% and shopping mall owner Simon Property Group, up 10.9%.

Analysts also cited a broadcast interview with Federal Reserve chairman Jerome Powell, who said the economic downturn would not be as bad as the Great Depression.

In currency markets, the euro jumped after France and Germany on Monday proposed a €500 billion (RM2.4 trillion) fund to finance the recovery of the European Union’s economy from the devastation wrought by the coronavirus crisis.

Financed by “borrowing from the market in the name of the EU”, the €500 billion will flow to the “worst-hit sectors and regions” in the 27-member bloc, the two countries said in a joint statement.

The agreement of such borrowing marks a major shift by Germany, which has until now rebuffed calls by Spain and Italy for so-called “coronabonds” or joint borrowing on financial markets to provide stimulus cash. – AFP, May 19, 2020.