Could the S&P/ASX 200 Index (ASX: XJO) roar back after there was some positive COVID-19 drug news?
President Trump had previously touted that hydroxychloroquine could be the answer against the coronavirus. But that didn't turn out to be the case.
However, experimental antiviral drug remdesivir could make a difference according to Dr Anthony Fauci.
Whilst an initial Chinese study didn't show that remdesivir helped, Dr Fauci's own US government trial showed patients with COVID-19 recovered 31 per cent faster than those given a placebo. A reduction from 15 days to 11 days.
Perhaps even more promising was the mortality rate of 8% given the drug, versus 11.6% given the placebo. However, this is apparently not 'statistically significant', and would those patients have recovered anyway? Seeing 8% of patients die is still a lot – it doesn't seem to cure the patient outright.
But markets love unexpected positive news.
Will the ASX 200 come roaring back?
If more trials prove that the drug can indeed make a difference, it could go a long way to giving governments and people the confidence to return back to somewhat normal life.
And it certainly gives investors confidence. Overnight the S&P 500 (INX) went up by another 2.7%. It's up 31.4% since 23 March 2020. Quite an incredible recovery. It's now only down 13.2% from the February 2020 high.
The ASX 200 is up 1.4% today. It has also recovered strongly, up 20.3% from the March 2020 low.
However, there's always a risk of a second wave of infections in Europe and the US which might cause a lot of problems. Would countries shutdown again? Or would economies stay open because the economic damage would be too much to do again?
I'm not sure the ASX 200 has permanently recovered. The share market is obviously forward looking, but I think people are painting the future too rosily without factoring in a sizeable chance of more difficult outcomes.
Either way, I'm going to keep investing in quality ASX shares when I see good value like I have been throughout this period.
