Hang Seng Index on course for weekend rally as oil prices recover
The Hang Seng Index regained some of the value lost in the oil price crisis, but failed coronavirus drug trials bring downward movement ahead of the weekend.
The Hang Seng Index opened Friday trading 0.6% down on its previous close, starting the day at 23,844.55. That downward trend continued in the early trading hours, with the index making a brief stop below 23,750.00.
A challenging week ended with the Hang Seng Index recouping some of the losses from its morning performance, entering the weekend of trading at 23,886.03.
Oil was the dominant factor behind Hang Seng fluctuations earlier in the week, with crude prices reaching new lows and causing panic among investors.
The index appeared to be rallying alongside oil prices as the week progressed, although some of that recovery has been undermined by the Friday news that a potential antiviral drug for coronavirus has failed in its first clinical trial.
Hang Seng and oil rebound from Tuesday woes to deliver short-term optimism; long-term outlook remains bleak
This week witnessed the biggest daily fall on the Hang Seng Index in around a month. As West Texas Intermediate (WTI) crude futures sank below zero for the first time in history, the Hang Seng Index shed 2.2% on 21 April.
Negative prices meant that the WTI, the US benchmark for oil prices, had to pay traders to take the oil off their hands as part of the May contract. This unprecedented event unsettled investors, with the Hang Seng Index declining as traders sought to remove their exposure to assets affected by the continuing crude crisis.
WTI and Brent, the global benchmark, recovered some recent losses as the week progressed, with major stock indices similarly able to make gains. The Hang Seng Index ended with an overall 2% decrease in the week of trading, but rose by 0.04% following that Tuesday low.
The Hang Seng Index may enjoy a respite from oil-driven losses, at least until the expected issues about fulfilling June contracts arise.
Failed coronavirus drug trials set to shrink global markets, derailing the late-week rally of the Hang Seng Index
This time last week, the Hang Seng Index was heading into the weekend with reason for cautious optimism towards the pandemic response.
Positive noises were emanating from the clinical trials undertaken by Gilead Sciences, the American pharmaceutical company. On Friday 24 April, markets reacted to the news that these trials had proven unsuccessful.
The World Health Organisation erroneously posted a draft report that showed that the China-based trial of the drug remdesivir had failed. The WHO subsequently took down that report, but its findings provoked that 0.6% fall on the Hang Seng Index at Friday's open.
The summary of the report stated that 'remdesivir was not associated with clinical or virological benefits'.
Gilead has countered the WHO's conclusions, declaring that further trials are required before ruling out the use of remdesivir. A spokesperson for Gilead indicated that 'trends in the data suggest a potential benefit' for the antiviral drug.
The quest for a medical solution to the spread of coronavirus will be an ongoing theme in market movements in the weeks and months ahead. While the news of the failed trial initially caused the Hang Seng Index to retract, the market may recover over the weekend as traders adjust their expectations about when a coronavirus vaccine may emerge.
Market acceptance of the remdesivir news could send the Hang Seng Index back on course for a weekend rally from its plunge earlier in the week.
While the long-term picture for oil remains bleak, prices are unlikely to drop below zero again in the immediate future. This could give the Hang Seng Index a platform over the weekend to continue to recoup its weekly losses.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on share opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets