The global risk rally was boosted on Friday by surprise increase in US nonfarm payrolls, talks of a merger between two pharmaceutic giants, AstraZeneca and Gilead fighting against the coronavirus, and the agreement among the OPEC+ countries to extend the historical production cut by a month.
The NFP data revealed on Friday that the US economy added 2.5 million new nonfarm jobs in May, versus 8 million job losses expected by analysts. Though the average hourly earnings turned negative (-1.0%), the surprise jump in US jobs supported the idea that the recovery post-Covid-19 would be faster than earlier thought.
News that the pharmaceutical giant AstraZeneca made a preliminary approach to Gilead, which has been developing Remdesivir - the only US approved treatment against Covid-19, should wet pharma investors’ appetite at the start of this week. Although talks between the two companies are not formal yet, the possibility of the biggest pharmaceutical merger in history will give a boost to the M&A activity which has been severely hit by the coronavirus crisis.
Major US indices ended last week on a strong positive note. The Dow rallied past 3%, as the S&P500 (+2.62%) and Nasdaq (+2.06%) recorded strong gains, reversing the deteriorating sentiment which was about to install into the weekend.
Asian stocks kicked off the week with gains. The Nikkei (+1.01%) advanced, as stocks in Shanghai (+0.28%) and Hong Kong (+0.17%) recorded timid gains on the back of a lower decline in Chinese exports in May (-3.3% versus -7.0% expected) and a slower-than-expected 0.6% contraction in Japanese GDP in the first quarter versus -0.9% preliminary estimate.
But mass protests across the world against George Floyd’s murder and the risk of a renewed rise in Covid-19 cases may dampen the mood at the start of the week.
