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The apparent failure of a much-hyped treatment for COVID-19 points to a subdued start for Australian share trade after US stocks closed flat.

Index futures edged up 12 points or 0.2 per cent to 5218 as US stocks surrendered strong early gains following a report that Gilead Sciences’ remdesivir flopped in a Chinese clinical trial.

The S&P 500 reversed to a closing loss of two points or 0.05 per cent in volatile trade after preliminary trial findings were accidentally published on the World Health Organization website. The Dow had been up more than 400 points but finished the session just 39 points or 0.17 per cent ahead. The Nasdaq shed less than a point or 0.01 per cent.

Hopes for remdesivir helped drive stocks sharply higher last Friday following reports that patients with COVID-19 had responded well to the drug in a US trial. The prospects for a successful treatment dimmed overnight after WHO published draft documents reportedly showing the drug did not help patients in a randomised clinical trial in China. A UK Financial Times report said the drug did not reduce the pathogen’s presence in the bloodstream and the drug showed significant side effects in some patients. Gilead shares closed 4.3 per cent lower despite the company’s defence that the trial results were inconclusive because the trial was terminated early.

“If we over-reacted last week to what looked like positive news [last week], it’s fair to give that back when the news turns out to be not so positive,” Keith Buchanan, portfolio manager at GLOBALT in the US, told Reuters. “Volatility is here to stay.”

Stocks rallied early in the session after data showed the number of first-time claims for unemployment benefits fell to 4.43 million last week from 5.24 million the week before. Despite the decline, data over the last five weeks indicate 26 million Americans have lost their jobs due to the impact of the virus on economic activity. A separate report showed activity in the services sector collapsed to a record low this month and manufacturing activity was the weakest in 11 years.

Energy stocks rebounded 3 per cent as heightened tensions between Iran and the US helped oil extend yesterday’s recovery. Brent crude settled 96 cents or 4.7 per cent higher at US$21.33 a barrel, adding to a 5.4 per cent rise in the previous session. The US benchmark surged $2.72 or 19.7 per cent to settle at US$16.50. Exxon Mobil gained 3.1 per cent and Chevron 2.8 per cent.

Oil prices recovered yesterday after US President Donald Trump said he had instructed the navy to “shoot down and destroy” Iranian gunboats if they menaced US ships. Crude prices briefly turned negative earlier in the week as buyers facing storage problems scrambled to avoid taking delivery.

Despite last night’s flat close, the tone of the session was broadly “risk on”, with utilities, real estate and consumer staples the worst performing sectors with declines of 1 – 1.8 per cent. Industrials rallied 0.8 per cent and materials 0.5 per cent. BHP’s US-listed stock put on 1.59 per cent and its UK-listed stock 3.21 per cent. Rio Tinto eased 0.54 per cent in the US after gaining 0.41 per cent in the UK. The spot price for iron ore landed in China dipped 50 cents or 0.6 per cent to US$83.70 a dry ton.

Gold was boosted by the grim US economic figures. Gold for June delivery settled $7.10 or 0.4 per cent ahead at US$1,745.40 an ounce.

Copper continued its recovery on the London Metal Exchange. Benchmark copper advanced 0.5 per cent to US$5,135.50 a tonne. Nickel rose 1.4 per cent and tin 1.1 per cent. Aluminium dropped 0.1 per cent, lead 1.1 per cent and zinc 1.2 per cent.

The dollar climbed 0.7 per cent to 63.69 US cents.

The S&P/ASX 200 has struggled this week, starting the week with a two-session tumble as oil collapsed, then closing flat on the last two days. An attempted rally yesterday ran out of steam as bank and health stocks turned negative. Barring a miracle today, the index is set to break a four-week winning run. There is nothing significant on the domestic economic calendar to trigger a reversal. Wall Street has durable goods orders scheduled for tonight, as well as earnings updates from AmEx, American Airlines and Verizon.

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