LONDON MARKET MIDDAY: Stocks Up On Gilead's Potential Virus Treatment

(Alliance News) - Stocks in London were sharply higher at midday on Friday on reports of an encouraging Gilead Sciences drug that showed effectiveness in treating the coronavirus.

Early trial data shows Gilead's drug remdesivir is producing rapid recoveries in Covid-19 patients, Stat News reported on Thursday.

Remdesivir was originally developed by Gilead Sciences as a treatment for the Ebola virus disease and Marburg virus infections.

The University of Chicago Medicine study recruited 125 Covid-19 patients for Gilead's two phase 3 clinical trials, all of whom were treated daily with remdesivir. Stat News cited a recording of University of Chicago Medicine infectious disease expert Kathleen Mullane discussing trial results with her colleagues.

Studies have found remdesivir blocks a particular enzyme that is required for viral replication. Coronaviruses replicate by copying their genetic material using an enzyme known as the RNA-dependent RNA polymerase. Rribonucleic acid polymerase is the central component of coronaviral replication.

In response, Gilead said the evidence was anecdotal and "do not provide the statistical power necessary to determine the safety and efficacy profile of remdesivir as a treatment for Covid-19". Gilead expects to report data from a controlled study in patients with severe disease by the end of April, with data from a study of patients with moderate disease coming in late May.

Gilead's stock leapt more than 15% in after-hours trading in New York following the report.

In addition, drugmaker Roche Holding announced it has developed a new Covid-19 test able to detect antibodies to the virus and indicate whether a person has become immune. The current tests available can only tell if a person currently has the SARS-CoV-2 virus, which causes Covid-19.

The FTSE 100 index was up 186.06 points, or 3.3%, at 5,814.49. The mid-cap FTSE 250 index was up 492.13 points, or 3.2%, at 15,870.70. The AIM All-Share index was up 16.65 points, or 2.2% at 760.00.

The Cboe UK 100 index was up 3.0% at 9,834.80. The Cboe 250 was up 2.8% at 13,602.60, and the Cboe Small Companies up 1.2% at 8,761.37.

In mainland Europe, the CAC 40 in Paris was up 4.4% while the DAX 30 in Frankfurt was up 3.7% in the afternoon.

"Investors seem to be determined to remain optimistic and reports overnight that a coronavirus treatment from Gilead Sciences had delivered positive results in treating coronavirus was just the tonic they were looking for. While there is caution about the results, which were from a small sample size, it is a reminder that a lot of highly skilled people are working on vaccines and treatments which could eventually defeat the pandemic," said AJ Bell's Russ Mould.

In the FTSE 100, Flutter Entertainments was up 12% after the gambling firm reported a rise in revenue in its most recently ended quarter before betting shops were closed and sports events cancelled to combat the spread of Covid-19.

For the three months to the end of March, the company formerly known as Paddy Power Betfair saw revenue rise 16% year-on-year to GBP547 million from GBP478 million.

Flutter said performance has deteriorated significantly since the introduction of restrictions on movement to fight the spread of Covid-19, but not as badly as first feared.

In the four weeks from March 16 to April 12, revenue for PBB Online fell by 32% year-on-year. Sports revenue declined by 57% and by 65% since the suspension of Irish racing from March 25. However, Gaming revenue increased by 15%.

Aerospace aftermarket services providers Melrose Industries and Rolls-Royce Holdings were up 13% and 11% respectively amid signs of life in the aviation sector.

US aerospace firm Boeing's workers return to their jobs starting next week to resume building commercial planes in Washington state for the first time since the plant was shuttered due to the coronavirus, the company said Thursday.

Boeing said it plans a "phased" ramp-up at its facilities in Everett, Washington, which was closed in late March due to Covid-19 outbreak. The facility builds several commercial aircraft models including the 777 and the 737, and Boeing said about 27,000 workers will return to the operation. The manufacturer's South Carolina plant, which produces the 787 Dreamliner, remains closed.

The Dow component was up 9.7% in pre-market trade in New York.

InterContinental Hotels Group was up 11% after Barclays double upgraded the hotel operator to Overweight from Underweight.

The pound was quoted at USD1.2457 at midday, lower than USD1.2466 at the London equities close Thursday.

On the economic front, the Adam Smith Institute accused the UK fiscal watchdog, the Office for Budget Responsibility, of underestimating the long-term hit from the lockdown and closure of a third of the UK economy. It said the OBR's scenario analysis released earlier this week did not factor in the risk of systemic economic decline if the UK's lockdown is sustained.

The OBR predicted the economy could shrink by 35% and unemployment rise by 2 million if the lockdown continues for three months followed by a partial lifting for three months – but its analysis did not assume any lasting economic consequences.

The institute warned the UK was falling behind other countries that already have reopening strategies and timelines in place, such as Germany, Italy, Norway, Austria, Spain, Denmark and the Czech Republic. It said this was holding UK businesses back from being able to plan for recovery once lockdown restrictions are eased.

The euro stood at USD1.0838 at midday, down from USD1.0868 late Thursday.

In economic news from the continent, the eurozone's inflation rate slowed sharply in March, data from Eurostat confirmed. The bloc's annual inflation rate was 0.7% in March, decelerating from 1.2% in February, confirming the earlier estimate. The figure came in line with market expectations.

On a monthly basis, inflation was 0.5% in March, unchanged from the month before.

Elsewhere, eurozone construction output fell 1.5% on a monthly basis and fell 0.9% on an annual basis in February. In January, construction output had risen 4.0% month-on-month and 6.9% year-on-year.

Against the yen, the dollar was trading at JPY107.92, up from JPY107.31 late Thursday.

Stocks in New York are set for a higher open on Friday after US President Donald Trump on Thursday issued a three-phase plan to reopen the US and relaunch the economy. However, Trump left the ultimate decision on when to move ahead to the states' governors.

The DJIA was called up 3.2%, the S&P 500 index up 3.1% and the Nasdaq Composite up 2.4%.

Brent oil was quoted at USD28.11 a barrel at midday, up from USD27.78 at the London equities close Thursday.

Saudi Arabian Oil said it will provide 8.5 million barrels of crude oil per day from the start of May, cutting back in response to Thursday's OPEC deal.

Back in March, Saudi Arabia - the world's biggest crude exporter - announced it would increase production by at least 2.5 million barrels per day to 12.3 million barrels per day starting in April.

This came after the nation and other major producers, including Russia, failed to reach a deal in March to slash output and shore up prices amid plummeting demand in the wake of the Covid-19 pandemic.

Last weekend, OPEC and its allies struck a deal to scale back output by around 10 million barrels per day, but oil prices have not rallied as traders see it as insufficient given the magnitude of the drop in demand.

Gold was quoted at USD1,717.00 an ounce at midday, down against USD1,728.30 late Thursday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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