Moderna Shares Jump Over 15% After COVID-19 Vaccine Proves 94.5% Effective; Target Price $136

Moderna Inc, an American biotech company focused on drug discovery, said the Phase 3 study of mRNA-1273, its vaccine candidate against COVID-19, showed that it was 94.5% effective in preventing COVID-19, sending its shares up over 15% in pre-market trading on Monday.

This comes just after Pfizer and BioNTech announced last week that the first interim efficacy analysis from the phase-3 study found their jointly developed mRNA-based vaccine candidate to be over 90% effective in preventing COVID-19 among participants.

Based on these interim safety and efficacy data, Moderna said it will submit for an Emergency Use Authorization with the U.S. Food and Drug Administration in the coming weeks.

“This de-risk the platform and should increase visibility on a potential ‘best in class’ vaccine. This is at least line w/topline results from the PFE study which was above 90%. Next big event is whether other vaccines that are not mRNA-technology based can show these very strong initial results,” said Michael J. Yee, equity analyst at Jefferies.

Following this announcement, Moderna shares surged more than 15% to $102.88 in pre-market trading on Monday; the stock is up over 400% so far this year.

Executive Comments

“This is a pivotal moment in the development of our COVID-19 vaccine candidate. Since early January, we have chased this virus with the intent to protect as many people around the world as possible. All along, we have known that each day matters,” said Stéphane Bancel, Chief Executive Officer of Moderna.

“This positive interim analysis from our Phase 3 study has given us the first clinical validation that our vaccine can prevent COVID-19 disease, including severe disease,” Bancel added.

Moderna Stock Price Forecast

Eleven equity analysts forecast the average price in 12 months at $100.00 with a high forecast of $136.00 and a low forecast of $88.00. The average price target represents an 11.87% increase from the last price of $89.39. From those 11 analysts, nine rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $100 with a high of $335 under a bull-case scenario and $17 under the worst-case scenario. The firm currently has an “Overweight” rating on the biotechnology company’s stock.

“Overall, we believe these data are strong and support mRNA-1273 as a best-in-class vaccine for COVID-19. We expect further details, including all key secondary endpoints such as the impact on asymptomatic disease, once the study completes. We see Moderna up on today’s update,” said Matthew Harrison, equity analyst at Morgan Stanley.

Several other analysts have also recently commented on the stock. The Goldman Sachs Group set a $105.00 price objective on shares of Moderna and gave the stock a “buy” rating in July. Piper Sandler lifted their price target on shares of Moderna to $136 from $134. Oppenheimer reissued a “buy” rating and issued a $108.00 price target.

Analyst Comments

“We are Overweight Moderna. The company has taken an industrialized approach to developing mRNA-based therapeutics and has rapidly generated a broad pipeline of 21 programs, 11 of which have entered clinical development. We believe Moderna’s mRNA drug development platform is more diversified and scalable compared with competitors, and is validated through broad partnerships with Merck and AstraZeneca,” Morgan Stanley’s Harrison added.

“The COVID-19 vaccine programs provide a significant acceleration of the path to commercialization and validation of the Moderna platform. We are positive on the early data and look forward to the progress. We see vaccines and rare diseases as the key valuation drivers of the company.”

Upside and Downside Risks

Risks to Upside: 1) Supporting clinical data across several modalities. 2) Meeting timelines and continuing to expand a diversified pipeline. 3) Launch vaccines in multiple indications including CMV and COVID-19 – highlighted by Morgan Stanley.

Risks to Downside: 1) Efficacy and/or safety concerns cause investors to write-off subsequent readouts across additional modalities. 2) Delays in Moderna’s ability to generate significant clinical data. 3) Stronger than expected competitor data.

Markets Remain Unsettled

Emerging market currencies and the majors that benefit from world growth outperformed the perceived safe-havens, like the yen and the Swiss franc. The euro rose above $1.19 briefly before selling off to trade below $1.18. Gold collapsed.

Yesterday’s violent moves may have been an overreaction, but today’s action is more consolidative than a reversal. Most Asia Pacific markets rallied, led by 3-4% gains in Singapore, Malaysia, and Thailand. China and Taiwan were exceptions with their losses. Europe’s Dow Jones Stoxx 600 is firm as it consolidating yesterday’s is nearly 4% gain. US shares are mixed with the tech-heavy NASDAQ looking at additional steep losses, while the S&P 500 is trading about 0.5% lower.

Australia and New Zealand saw big jumps (13-15 bp) in their 10-year yields as they catch-up to yesterday’s move in the US and Europe. Europe’s benchmark yields are firm, and the US is firm with the 10-year Treasury yield changed around 0.94%, having reached an eight-month high near 0.97% yesterday. The dollar is trading firmly against most of the major currencies, with sterling a notable exception.

It extended yesterday’s gains and traded around $1.3260, its best level since September 7. The JP Morgan’s Emerging Market Currency Index is snapping a five-day advance. The Turkish lira and South African rand are paring yesterday’s gains. Gold has steadied after yesterday’s 4.5% shellacking, its biggest loss in three months. The attempt to resurface $1900 was rebuffed. Oil prices are holding on to yesterday’s gains. The December WTI is around $40.65 a barrel in the European morning after reaching almost $41.35 yesterday. Recall that early last week, it hit a low near $33.65

Asia Pacific

While Pfizer‘s vaccine and Eli Lilly’s antibody therapy appear promising, Brazil’s testing of China’s Sinovac’s Coronavac was halted due to an “adverse event.” What needs to be kept in balance is that there are still many steps before a vaccine is available, and the most pressing health issue is the surge in the infection. Vigilance is still needed.

Falling pork prices saw Chinese CPI fall below 1% for the first time in three years in October. The 0.5% year-over-year CPI was lower than expected and follows a 1.7% gain in September. Pork prices fell by 7% in October. The 2.8% decline year-over-year is the first since February 2019. Food prices as a whole rose 2.2% year-over-year after 7.9% in September. Non-food prices were flat, and core prices were unchanged at 0.5% from a year ago. Producer prices remained 2.1% lower than a year ago, the same as in September. Economists had expected a little improvement. Chinese officials do not seem ready to respond, and deflationary pressures on consumer prices will likely continue.

Japan reported a smaller than expected September current account surplus of JPY1.66 trillion down from JPY2.11 trillion. On the other hand, Japan’s trade surplus grew, practically doubling month-over-month to JPY918 bln from JPY413 bln. In the past six months, Japan’s trade surplus has swung from a JPY929 bln deficit to the September surplus of nearly the same magnitude reported today. Separately, as has been well telegraphed, Prime Minister Suga ordered the compilation of a third supplemental budget.

The dollar soared against the Japanese yen yesterday, rising from around JPY103.20 to about JPY105.65. It is consolidating in the upper end of that range today (~JPY104.80-JPY105.45). There is an expiring option for $980 mln at JPY105.50 and a smaller option for JPY375 mln at JPY106 that also rolls off today. Initially, it looks like Tokyo sold into the dollar’s surge, but buyers returned, and the dollar was recording session highs in the European morning. The Australian dollar reached nearly two-month highs yesterday near $0.7340 and retreated to almost $0.7265.

It has been unable to distance itself much from those lows today and has held below $0.7300. A break of the $0.7250 area may signal a move toward $0.7200. The PBOC set the dollar’s reference rate at CNY6.5897, near what the bank models expected. The dollar is trading within yesterday’s range (~CNY6.5640-CNY6.6350)

Europe

Germany failed to convince the other EU members to postpone WTO-sanctioned tariffs on US goods in retaliation for improper subsidies for Boeing. The new EU tariffs on $4 bln of US goods will be formally announced today. While it is perfectly within its legal rights to do, the risk is that the US makes good on its threat to boost the levies that it was allowed to impose because of Europe’s improper subsidies for Airbus. Regardless of the election outcome, Trump is still the US President, and the office is still powerful. For example, new sanctions were announced on four more Chinese officials for the dissent crackdown in Hong Kong.

The UK employment report was weak. The unemployment rate jumped to 4.8% from 4.5%. It is the highest for a three-month period in four years. Employment has fallen by 164k in the three-month through September. The government’s extended furlough program was not announced in time to impact this time series. Separately, the House of Lords removed the most controversial clauses in the government’s Internal Market Bill, but it will be reinserted by the House of Commons.

There is some speculation the new US administration is considerably more skeptical of the merits of Brexit that it could impact the UK-EU negotiations, as the Irish foreign minister suggested. However, it seems like a stretch, and the deadline for the trade deal is less than a week away.

The euro briefly traded above $1.19 yesterday before selling off and dipping below $1.18. After struggling to sustain even modest upticks, it has been sold in the European morning to around $1.1780. The halfway point of the rally from the test on $1.16 last week to yesterday’s high is near $1.1760, and the next retracement (61.8%) is closer to $1.1725. There is an option for 1.5 bln euro at $1.18 that expires today and another for about 665 mln euros at $1.17. Sterling is the strongest of the major currencies.

While sterling was firm the Asia Pacific session, it pushed higher in the European morning. The next chart target is near $1.33. Sterling strength appears to be coming from the cross against the euro. The euro broke down yesterday, and the follow-through selling has driven the single currency below its 200-day moving average (~GBP0.8925) for the first time in six months. The next target may be the September low near GBP:0.8865.

America

The US quickly took credit for the Pfizer vaccine, but it got no funds from Operation Warp Speed for the trial, testing, and manufacturing. Pfizer’s partners, BioNTech SF, did receive almost $450 mln from Germany. What the US did was agreed to pay $2 bln for 100 mln vaccines and an option for another 500 mln doses. The US does get to decide who gets the vaccine first. Reports suggest Pfizer will handle the distribution directly and has designed reusable contained to keep the medicine at the cold temperature necessary. Moderna uses an approach similar to Pfizer’s, and the results are expected in the coming weeks.

While the JOLTS report is the economic data highlight, no fewer than five Fed officials will talk through the day today. Governor Brainard, who is seen as a possible candidate for Treasury Secretary, discusses the Community Reinvestment Act and could draw extra attention. Mexico and Canada also have light economic calendars today. Mexico’s slightly higher than expected headline inflation but slightly lower core inflation keeps the market favoring a rate cut late this weeks.

The US dollar was sold to new lows for the year yesterday against the Canadian dollar (~CAD1.2930), but the greenback recovered to close above CAD1.30, which is now support. It is firm today, having reached CAD1.3040 in the European morning. Yesterday’s high was near CAD1.3070. The greenback is was testing CAD1.34 at the end of October, and some near-term consolidation is likely. The US dollar fell to almost MXN20.00 yesterday after finishing last week near MXN20.60. It, too, is consolidating today. It is near the middle of today’s range in late morning dealings in Europe (~MXN20.35)

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Marc Chandler, MarctoMarket.

Pfizer and BioNTech Shares Rally After Jointly Developed COVID-19 Vaccine Proves Over 90% Effective

Pfizer and BioNTech said that the first interim efficacy analysis from the phase-3 study found their jointly-developed mRNA-based vaccine candidate to be over 90% effective in preventing COVID-19 among participants, sending shares higher in pre-market trading on Monday.

However, the company said the submission for Emergency Use Authorization (EUA) to the U.S. Food and Drug Administration has been planned for soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November.

“We look forward to tolerability and safety details, which have not yet been disclosed. The trial will continue through a final analysis at 164 confirmed cases. The trial has enrolled 43,538 participants to date, and of these, 38,955 had received a second dose as of Nov 8. PR noted that there will be a new secondary endpoint evaluating efficacy based on cases accruing 14 days after the second dose,” said David Risinger, equity analyst at Morgan Stanley.

“Pfizer expects to produce >50M vaccine doses in 2020 and up to 1.3B doses in 2021. We plan to update our financial model; please see Oct 7 report titled “All eyes on COVID vaccine timeline” which includes our published Pfizer vaccine risk-adjusted model,” Risinger added.

Following this announcement, Pfizer shares surged about 14% to $41.4 in pre-market trading on Monday; however, the stock is down about 7% so far this year. Additionally, BioNTech shares climbed over 25% to $115.13 in pre-market trading; the stock is up over 170% so far this year.

Executives’ comments

“The first interim analysis of our global Phase 3 study provides evidence that a vaccine may effectively prevent COVID-19,” said Prof. Ugur Sahin, BioNTech co-founder and CEO. “We will continue to collect further data as the trial continues to enroll for a final analysis planned when a total of 164 confirmed COVID-19 cases have accrued. I would like to thank everyone who has contributed to make this important achievement possible.”

”After discussion with the FDA, the companies recently elected to drop the 32-case interim analysis and conduct the first interim analysis at a minimum of 62 cases. Upon the conclusion of those discussions, the evaluable case count reached 94 and the DMC performed its first analysis on all cases. The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose,” said Dr. Albert Bourla, Pfizer Chairman and CEO.

“This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule. As the study continues, the final vaccine efficacy percentage may vary. The DMC has not reported any serious safety concerns and recommends that the study continue to collect additional safety and efficacy data as planned. The data will be discussed with regulatory authorities worldwide.”

Pfizer Stock Price Forecast

Eight equity analysts forecast the average price in 12 months at $42.88 with a high forecast of $53.00 and a low forecast of $38.00. The average price target represents a 17.80% increase from the last price of $36.40. From those eight analysts, four rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $42 with a high of $48 under a bull-case scenario and $31 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmaceutical company’s stock. Pfizer had its price target upped by investment analysts at SVB Leerink to $43 from $42. The firm presently has a “market perform” rating on the biopharmaceutical company’s stock.

Several other analysts have also recently commented on the stock. Royal Bank of Canada set a $43.00 target price on shares of Pfizer and gave the company a “buy” rating. Truist assumed coverage and set a “buy” rating and a $42 target price on the stock. At last, Atlantic Securities downgraded shares of Pfizer from an “overweight” rating to a “neutral” rating and cut their price target to $39 from $44.

We think it is good to buy at the current level and target at least $53 as 100-day Moving Average and 100-200-day MACD Oscillator signal a buying opportunity.

Analyst Comments

“We project solid growth prospects, and the company’s COVID vaccine candidate offers optionality. Pfizer’s financials and dividend are set to adjust in 4Q20 when it completes the Viatris transaction,” Morgan Stanley’s Risinger added.

“Pipeline execution will be key to investor perception, given late-decade patent expiration exposure.”

Upside and Downside Risks

Risks to Upside: Upside risks are COVID vaccine success, better COVID vaccine data than competitors, core business financial upside, positive pipeline developments, and encouraging strategic action – highlighted by Morgan Stanley.

Risks to Downside: Downside risks are COVID vaccine failure, COVID vaccine underperforms competitors, financial shortfalls, pipeline disappointments, disappointing strategic action, and negative US drug pricing developments.

Pfizer Vaccine Breakthrough Boosts Markets

Pfizer And BioNTech Report Great Results From Their Large-Scale Study Of COVID-19 Vaccine

S&P 500 futures have recently received a major boost after Pfizer and BioNTech COVID-19 vaccine was found to be more than 90% effective in the first analysis of the large study.

Vaccine news provided significant support to stocks, and S&P 500 futures are gaining more than 4% in premarket trading. Not surprisingly, shares of vaccine developers are gaining a lot of ground ahead of the market open – Pfizer shares are up by 12% while BioNTech stock is up by more than 23%.

Meanwhile, WTI oil managed to return back above the $40 level as vaccine news increased hopes for a successful rebound of oil demand. At the same time, precious metals like gold and silver are under pressure as traders dump safe haven assets amid optimism about the vaccine.

Stay-At-Home Stocks Suffer On Vaccine News

While the vaccine news are positive for most stocks, shares of some companies are under major pressure in premarket trading.

Zoom and Peloton, which were one of the major winners during the pandemic, are down by almost 13%, and even Amazon is under pressure in premarket trading. As a result of the pressure on stay-at-home stocks, the tech-heavy Nasdaq is set to open higher by a modest 0.5%.

It remains to be seen whether vaccine news will trigger a real rotation from tech stocks into more cyclical stocks, but stay-at-home stocks will certainly have a very challenging trading session today.

Airline And Cruise Line Stocks Jump In Premarket Trading

Today, investors look ready to bet on beaten stocks like airlines and cruise lines. For example, American Airlines Group is up by 25% while Delta Air Lines  is gaining 18% in premarket trading.

Investors are even more optimistic about cruise lines like Carnival Corp. or Norwegian Cruise Line Holdings as an effective vaccine against COVID-19 may make the difference between bankruptcy and profitable business for these companies.

Traders should expect plenty of volatility in these stocks in the upcoming trading sessions as the market will try to find new price levels which take vaccine news into account.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As U.S. Approves Remdesivir For Use Against COVID-19

U.S. Approves Gilead’s Remdesivir As COVID-19 Drug

Shares of Gilead are gaining about 4% in premarket trading as U.S. approved remdesivir as a treatment for COVID-19. While many drugs have been tested to fight against the disease, only Gilead’s remdesivir managed to get regulator’s approval.

This approval will likely provide support to other companies in the sector. Vaccine developers Pfizer, BioNTech, Moderna are also gaining ground ahead of the market open.

The first drug approved for the use against coronavirus could provide additional support to the general market as traders are eager to buy stocks on any hint that the world will be able to solve the coronavirus crisis.

Traders Remain Focused On Stimulus Negotiations

This week’s news flow was dominated by reports about the ongoing stimulus negotiations. The market action was choppy as traders tried to evaluate whether Republicans and Democrats will be able to reach a compromise deal before November elections.

House Speaker Nancy Pelosi has recently stated that negotiations continued to progress. However, it remains to be seen whether Republicans will be ready to vote for a huge stimulus package that is proposed by Democrats.

Today, S&P 500 futures are gaining ground in premarket trading as traders are in optimistic mood ahead of the weekend. However, the situation may change quickly if evidence emerges that aid negotiations have stalled.

All Eyes On Flash PMI Data For October

Today, U.S. will release Flash PMI reports for October. Manufacturing PMI is expected to increase from 53.2 in September to 53.4 in October while Services PMI is projected to stay unchanged at 54.6.

Reports from other countries signaled that the services segment was struggling amid a second wave of the virus.

Euro Area Services PMI declined from 48 in September to 46.2 in October compared to analyst consensus of 47. Numbers below 50 show contraction. In the UK, Services PMI declined from 56.1 to 52.3 while analysts expected Services PMI of 54.

A weaker-than-expected U.S. Services PMI report will signal that economic recovery is losing steam and may put some pressure on stocks, although stimulus negotiations will remain the most important driver for the market.

For a look at all of today’s economic events, check out our economic calendar.

Markets’ Weather Weekly: Сloud-Computing and Office Software Business Missed Quarterly Estimates.

Overview and trends

U.S. weekly jobless claims hit 1.4 million, the first increase since March, as spiking virus cases halt reopening plans.

Microsoft shares tumbled as much as 2.8% on Thursday after its cloud-computing and office software business missed quarterly estimates. The share price slump caused nearly $46 billion dollars erased from the company’s market capitalization. Intel Corporation (INTC) shares were trading lower yesterday despite the company reported better-than-expected second-quarter EPS and earnings results.

As a result, the tech-heavy Nasdaq Composite finished down 2.3%. The S&P 500 closed down 1.2%. It was their worst performance since June 26. The Dow (INDU) fell 1.3%, or 354 points, its worst day in two weeks.

Stocks weren’t the only assets in the red. The US dollar, as measured by the ICE US Dollar Index, fell 0.2%. The index hit its lowest level since September 2018.

So far quarterly earnings come very mixed. On positive side there are good reports and good responses to the earnings reports from IBM (IBM), Texas Instruments (TXN), Biogen (BIIB), KeyCorp (KEY), as well as yesterday’s miracle from Tesla (TSLA) and upbeat sales commentary from Best Buy (BBY).

Then again, a close candidate for why things are “bad” would be the negative responses to earnings reports from Bank of America (BAC), Netflix (NFLX), Snap (SNAP), Capital One (COF), United Airlines (UAL), and Interactive Brokers (IBKR). Microsoft (MSFT) stock sank over 2% after reporting earnings that beat Wall Street expectations in most ways except in a key business. All these stories prompt us to be extremely vigilant, resourceful and contemplative – correct instrument selection and trade direction is key to trading success through this period!

The week was full of important news. US stocks climbed on Wednesday on positive earnings numbers from Microsoft and Tesla and as traders weighed raging tensions between the U.S. and China, a potential legislative extension to unemployment benefits, and coronavirus vaccine news. Donald Trump’s administration ordered the abrupt closure of China’s consulate in Houston, and official Beijing promptly responded with its intention to close the U.S. consulate in Wuhan in a tit-for-tat game condemned by Beijing as outrageous and unprecedented.

The U.S. government has struck an agreement with Pfizer (PFE) and BioNTech (BNTX) for up to 600 million doses of their COVID vaccine candidate should it be approved. This optimistic expectation and early preparation effort have created positive sentiment in terms of thinking about light at the end of the tunnel down the road.

Trading ideas

The Gold/Silver complex has caught renewed bids this week, which was tipped off by the major gold ETF – SPDR Gold Trust – showing up on the “Doji Week” scan back on Monday. The Doji Week scan is designed to find stocks that are in narrow ranges compared to prior week’s activity that is geared up for a stronger directional move.

There are a number of Gold/Silver – related ETFs and stocks appearing on the Wide Range Breakouts, Power Up, and Overbought results today as the market gets behind their momentum against a sliding US Dollar. As investors’ classics – Barrick Gold (GLD) and Newmont Corp. (NEM) – look increasingly overvalued by both investment multiples and technically, new kids on the block, such as Agnico Eagle Mines (AEM) and Kinross Gold (KGC) look increasingly promising. The two latter stocks unveil single digit price-to-sales ratios as opposed to double-digit ones for Barrick and Newmont.

AT&T (T)

The largest American telecom AT&T (T) beat estimates by 4 cents a share, with quarterly earnings of 83 cents per share. Revenue was in line with forecasts. The company said the COVID-19 pandemic impacted results across all its businesses. Thus, WarnerMedia revenue fell 23% to $6.8 billion as the pandemic shut down film production and movie theaters. Group revenue was down 9% YoY to $41 billion, roughly in line with the $41.1 billion consensus. In contrast, AT&T’s HBO Max boasted by around 36 million active customers (including legacy HBO subscribers), picking up 3 million in the quarter. Cash from operations was $12.1 billion with free cash flow of healthy $7.6 billion.

Total dividend payout ratio remains slightly below 50%. Nevertheless, we must not forget about this telecom’s two extremely important properties: number one, it is the value high dividend stocks. And number two, it is classic defensive countercyclical stock. Given increasing odds of exacerbating recession and noting almost ridiculously cheap valuations at P/E of less than 15, dividend yield of 7% and price-to-cash-flow of just 8 (yes, this is a single-digit number, eight), at the current price level AT&T is perhaps one of very few smart medium term buys.

Vladimir Rojankovski, Grand Capital Chief Analyst

US Stock Market: Multiple States Investigate Apple, Disney Delays Major Film Releases, Fear Gauge Rises

Thursday’s U.S. stock market losses led to investors seeking protection in options and Treasurys. This drove the Cboe Volatility Index (VIX) – seen by Wall Street as the market’s best “fear gauge” – to 26 and benchmark 10-year Treasury yields to 0.57%.

Some of the volatility was fueled late in the session by extreme “whipsaw” action. The wild, two-sided trade that steepened the late session selloff was triggered by a report from a watchdog group that said Apple Inc faces consumer protection investigations in multiple states. Apple traded 4.5% lower after the report.

Apple Faces Deceptive Trade Practices Probe by Multiple U.S. States:  Axios

Multiple U.S. states are investigating Apple Inc for potentially deceiving consumers, according to a March document obtained by a tech watchdog group, Reuters reported.

The Texas attorney general may sue Apple for violating the state’s deceptive trade practices law in connection with the multi-state investigation, according to the document, which was obtained by the Tech Transparency Project.

The document did not provide additional details.

The office of the Texas attorney general declined to comment. Apple did not immediately respond to a Reuters request for comment.

Apple has faced class-action lawsuits from consumers alleging that it deceived them about slowing the performance of iPhones with aging batteries. The company agreed to pay up to $500 million to settle one such lawsuit earlier this year.

Apple is also facing lawsuits alleging that it knew and concealed how the “butterfly” keyboards on its MacBook laptops were prone to failure.

Treasury Yields Fall Slightly After Jobless Claims Come in Worse Than Expected

Treasury yields dipped on Thursday after data showed U.S. jobless claims rose more than expected last week. The yield on the benchmark 10-year Treasury note fell one basis point to 0.584% and the yield on the 30-year Treasury bond were also lower at 1.274%. Yields more inversely to prices.

US Companies Making Headlines After Thursday’s Bell

Intel’s stock dropped 8% in extended trading after the company offered disappointing third-quarter guidance. Intel released its second quarter earnings, beating predictions of analysts surveyed by Refinitiv.

After Intel said the company’s 7mm-based CPU product timing is delayed, shares of Advanced Micro Devices climbed 7% in after hours.

Moderna’s stock dropped 2% in extended trading after falling 9.49% earlier in the day. The drop comes after the U.S. Patent and Trademark Office ruled Moderna does not have a claim to a patent held by a rival company.

The ruling could potentially delay Moderna’s race to produce a coronavirus vaccine. Shares of BioNTech jumped 2% while Novavax’s stock fell 1% in after hours.

Disney’s stock fell 1% after the closing bell. The company announced Thursday afternoon that its movie “Mulan” is delayed indefinitely and all Star Wars films and Avatar sequels have been pushed back a year due to theater closures and production shutdowns spurred by the coronavirus pandemic.

For a look at all of today’s economic events, check out our economic calendar.

Pfizer and BioNTech to Get $1.95 Billion from U.S. Govt for COVID-19 Vaccine Doses

Pfizer Inc, an American multinational pharmaceutical corporation headquartered in New York City, and its German partner BioNTech will receive $1.95 billion from the United States government for delivering 100 million doses of a COVID-19 vaccine, sending Pfizer shares up over 5% pre-market.

The U.S. government will pay both the companies $1.95 billion upon the receipt of the first 100 million doses, following FDA authorization or approval. The agreement allows them to acquire an additional 500 million doses.

Americans will receive the vaccine for free consistent with U.S. government’s commitment for free access for COVID-19 vaccines, the Department of Health and Human Services and the Department of Defense said.

U.S. Big Pharma Pfizer and German biotech partner BioNTech expect the COVID-19 vaccine to be ready to seek Emergency Use Authorization or some form of regulatory approval as early as October 2020. Both the companies anticipate producing globally up to 100 million doses by the end of 2020 and potentially more than 1.3 billion doses by the end of 2021.

“We don’t know how many competing vaccines will be sold in the U.S. in 2021, but if BNT162 is administered to 100 million people, the two-dose series would yield US revenue of $3.9 billion. To put it in perspective, dividing half of that figure by Pfizer BioPharma global revenues of approximately $43 billion in 2021e implies 4.5% revenue upside. Pfizer also has 50-50 rights ex-US, where volume potential is much greater but pricing likely lower,” said David Risinger equity analyst at Morgan Stanley.

“We look forward to BNT162 and competitors’ Phase 3 data in 2H:20 and evolution of the competitive landscape over time. Regarding US pricing potential beyond the pandemic period, Pfizer has suggested that it could ultimately charge higher prices for a COVID vaccine. We believe long-term pricing would depend upon 1) relative efficacy & safety of Pfizer’s vaccine vs. others, 2) magnitude of competition, and 3) government negotiations.”

Pfizer’s shares jumped over 5% pre-market, while BioNTech’s NASDAQ-listed shares were up over 10%.

Executives’ comments

“We’ve been committed to making the impossible possible by working tirelessly to develop and produce in record time a safe and effective vaccine to help bring an end to this global health crisis,” said Dr Albert Bourla, Pfizer Chairman and CEO.

“We made the early decision to begin clinical work and large-scale manufacturing at our own risk to ensure that product would be available immediately if our clinical trials prove successful and an Emergency Use Authorization is granted. We are honoured to be a part of this effort to provide Americans access to protection from this deadly virus.”

“We are pleased to have signed this important agreement with the U.S. government to supply the initial 100 million doses upon approval as part of our commitment to address the global health threat. This agreement is one of many steps towards providing global access to a safe and efficacious vaccine for COVID-19,” said Ugur Sahin, M.D., CEO and Co-founder of BioNTech.

“We are also in advanced discussions with multiple other government bodies and we hope to announce additional supply agreements soon. Our goal remains to bring a safe and effective COVID-19 vaccine to many people around the world, as quickly as we can.”

Pfizer stock forecast

Fourteen analysts forecast the average price in 12 months at $41.41 with a high forecast of $55.00 and a low forecast of $35.00. The average price target represents a 12.86% increase from the last price of $36.69. From those 14, six analysts rated ‘Buy’, eight rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price under a bull scenario is $41 and $27 under the worst-case scenario. We second Morgan Stanley on Pfizer’s stock outlook. We also think it is good to buy at the current level and target $40 as 50-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Analyst view

“We project solid growth prospects, but we note that Pfizer’s financials and dividend are set to adjust. We project solid single-digit long-term growth. Pipeline execution will be key to investor perception,” said David Risinger equity analyst at Morgan Stanley.

Upside and Downside risks

Upside risks are core business upside, positive pipeline developments, strategic action creates shareholder value, and multiple expands due to improving growth prospects, Morgan Stanley highlighted as upside risks to Pfizer.

Downside risks are financial shortfalls, P/E contracts due to pipeline shortfalls, strategic action is disappointing, litigation problems, and negative US drug pricing developments, Morgan Stanley highlighted as downside risks.

Vaccine Hopes, EU Deal Drive Asia Pacific Shares Higher; Alibaba’s Ant Group Announces Dual-Listing

The major Asia Pacific stock indexes rebounded on Tuesday following Monday’s mixed performance with some hitting five-month highs after European Union leaders agreed on a massive stimulus plan for their coronavirus-blighted economies.

The indexes opened higher following Wall Street’s lead on hopes that vaccines against the COVID-19 disease might be ready by the end of the year, following promising early data from trials of three potential vaccines.

On Tuesday, Japan’s Nikkei 225 Index settled at 22884.22, up 166.74 or +0.73%. Hong Kong’s Hang Seng Index is trading 25527.10, up 469.11 or 1.87% and South Korea’s KOSPI Index closed at 2228.83, up 30.63 or +1.39%.

China’s Shanghai Index is trading 3321.38, up 7.23 or +0.22% and Australia’s S&P/ASX 200 closed at 6156.30, up 154.70 or +2.58%.

Asian Shares Boosted by EU Recovery Fund Deal

European Union (EU) leaders reached a deal on a 750 billion Euro ($857 billion) recovery fund to help the region recover from the coronavirus crisis.

European Council President Charles Michel said he believes this deal will be seen as a “pivotal moment” for Europe. “We did it! Europe is strong. Europe is united,” he said in an early Tuesday press conference announcing the agreement. “These were, of course, difficult negotiations in very difficult times for all Europeans.”

Positive Coronavirus Vaccine News Buoys Market Sentiment

Asia Pacific markets were supported early in the session on Tuesday after investor sentiment was supported by a slew of positive news on the coronavirus vaccine front.

Pfizer and BioNTech reported early positive data on a joint coronavirus vaccine Monday and another candidate from Oxford University and AstraZeneca also showed a positive immune response in an early trial.

Alibaba’s Ant Could Be Bigger than Some Wall Street Banks

Ant Group, an affiliate of Alibaba, announced plans for its long-awaited dual listing in Shanghai and Hong Kong on Monday. E-commerce giant Alibaba Group Holding’s Hong Kong shares jumped 6.59% on the news.

Ant Group runs Alipay, one of China’s most popular mobile payment apps, but has also been expanding into products such as wealth management and loans.

Ant Group has not priced its shares yet but one analyst said the company could be valued at over $200 billion.

For a look at all of today’s economic events, check out our economic calendar.

Mixed China Data, ECB in Focus

On the home front, the University of Oxford and AstraZeneca are working together on a potential vaccine, and yesterday there was chatter that things are going in the right direction. Nothing was announced, but it was speculated that there could be confirmation about the progress in the near-term, and that verification might even come today. Equity benchmarks on both sides of the Atlantic enjoyed decent gains, and some hit multi-week highs, while others set multi-month highs.

The pharma angle gave stocks a new lease of life as lately market participants have been fixated on the rate of new cases and the fatality rate. In the past week, we have also heard positive news from Gilead Sciences, Pfizer and BioNTech. Gilead’s, Remdesivir, can reduce the death rate by 62%, so that is being touted as a possible treatment. While two of the four drugs that Pfizer and BioNTech are working on as potential vaccines have been fast-tracked for FDA approval.

The optimism surrounding the drug stories overshadowed the news that China’s relationship with the US and the UK has deteriorated this week. The British government has banned Huawei from its 5G network. President Trump passed legislation that has removed Hong Kong’s special status, so the territory will lose out in terms of tariffs. In addition to that, the US government might seek to target individuals or organisations that are seen to be helping the Chinese government to impose itself on Hong Kong.

The moves by the UK and the US stem from the decision by the Beijing administration to introduce a law that has chipped away at Hong Kong’s autonomy. Traders will be keeping an eye on the situation, but it seems that the Donald doesn’t want to spark a big economic conflict with China, probably because he has an election to fight in November and his approval ratings are not great.

The US economy continues to rebound. The industrial production rate for June increased by 5.4%, and that was a big improvement from the 1.4% that was posted in May. The New York Fed manufacturing index jumped to 17.2 in July, a 14 month high. The reports suggest there is a lot of pent up demand, and that is being released as the economy is reopening. That level of growth is likely to taper off as it is unsustainable.

Overnight, China released a number of economic reports. The yearly GDP reading for the second quarter was 3.2%, and the consensus estimate was 2.5%. In the first quarter, the GDP reading was -6.8%. Retail sales in June were -1.8%, undershooting the 0.3% forecast, while the previous reading was -2.8%. Industrial production last month showed growth of 4.8%, and economists were expecting 4.7%.

The May report was 4.4%. Fixed asset investment fell by 3.1%, and the forecast was -3.3%, keep in mind the last reading was -6.3%. Equity markets in Asia are in the red as there are concerns that spending and investment in China remains weak. Indices in Europe are expected to open a little lower.

The ECB meeting will be in focus today. The refinancing rate and the deposit rate are tipped to hold steady at 0.0% and -0.5% respectively. Last month, the pandemic emergency purchase programme (PEPP) was upped by €600 billion to €1.35 trillion, and the scheme was extended from the end of 2020 until June 2021. The inflation and growth forecasts were trimmed. It is worth noting that there has been an impressive rebound in certain economic indicators, such as services and manufacturing.

In late June, the bond purchases made as a part of the PEPP, cooled to its lowest level since the stimulus package was expanded. That could be a sign the ECB want to rein in the easing programme as the economy is recovering at a quicker rate than initially expected. Even if the central are happy with the economic rebound, they won’t want to spook the markets. They will probably play it safe and state they are monitoring the situation, and that they are ready to act, should they feel it is required. The rate decision will be revealed at 12.45pm (UK time) and the press conference will start at 1.30pm (UK time).

The US dollar index fell to its lowest level in over one month yesterday as dealers dropped the greenback in favour of riskier assets, such as stocks. The euro benefitted from the slide in the greenback and it hit its highest level since March.

Metals were a mixed bag yesterday. Gold had a muted move, but it held above the $1,800 mark. Silver, benefitted from the softer greenback and it hit a new 10 month high. On the other hand, copper lost over 1.5%. The red metal had a great run from late March until now, and it is possible that dealers squared up their books ahead of the Chinese data being reported.

The Fed’s Beige Book was posted last night and almost all of the 12 districts saw an increase in economic activity as lockdown restrictions were eased. The outlook remains very uncertain, especially in light of the fact that some states are undoing the reopening of their economies.

Oil rallied yesterday on the back of the EIA report, it showed that US oil stockpiles dropped by nearly 7.5 million barrels, while the consensus estimate was for a draw of 2.25 million barrels. Gasoline inventories fell by 3.14 million barrels, and that was a larger drop than expected. The readings paint a picture of a US economy that is consuming more energy, hence the positive move in WTI and Brent crude.

At 7am (UK time) the UK labour reports will be released. The claimants count for June is tipped to fall to 250,000 from 528,900 in May. The unemployment rate is anticipated to rise to 4.2% in May, up from 3.9% in April. The average earnings reading that excludes bonuses to expected to fall to 0.5% in May, from 1.7% in April.

French CPI is tipped to slip to 0.1% in June from 0.4% in May. The report will be posted at 7.45am (UK time).

Traders will be keeping an eye on the various economic reports from the US. Initial jobless claims are tipped to fall from 1.31 million to 1.25 million. The continuing claims reading is anticipated to be 17.6 million, and keep in mind the previous reading was 18.06 million. The retail sales report for May was 17.7%, a record reading, and the June level is tipped to cool to 5%. The retail sales report that strips auto-sales is expected to be 5%, and that would be a fall from the 12.4% registered in May. The Philly Fed manufacturing index is tipped to be 20. The reports will be posted at 1.30pm (UK time).

EUR/USD – since late June it has been in an uptrend, and a break above the 1.1400 zone might put 1.1495 on the radar. A break below the 1.1168 area might pave the way for 1.1053, the 200-day moving average, to be targeted.

GBP/USD – has been trading sideways in the past few sessions. A move higher might run into resistance at 1.2694, the 200-day moving average. A move through that level should put 1.2813 on the radar. Should it move lower, it might find support at 1.2424, the 100 day moving average.

EUR/GBP – Monday’s candle has the potential to be a bullish reversal, and if it moves higher it could target 0.9239. A break below the 50-day moving average at 0.8963, could put the 0.8800 zone on the radar.

USD/JPY – has been drifting lower for the last month and support could come into play at 106.00. A rebound might run into resistance at 108.37, the 200-day moving average.

FTSE 100 is expected to open 18 points lower at 6,274

DAX 30 is expected to open 67 points lower at 12,863

CAC 40 is expected to open 19 points lower at 5,089

By David Madden (Market Analyst at CMC Markets UK)

Europe Set for Negative Start, US-China Tensions Rise, US Tech Giants Fell

Pfizer and BioNTech are working on four drugs that they are hoping will go on to be coronavirus vaccines, and the FDA put two of the four on a fast track for approval. At the back end of last week, BioNTech said they could receive approval as early as Christmas, but in light of yesterday’s news, it might even be sooner.

European equities closed higher and US stocks got off to a good start on the back of the news. The FDA update carried on nicely from Friday’s news that Remdesivir, the antiviral drug produced by Gilead Sciences, can reduce the fatality rate in coronavirus sufferers by 62%. In the past couple of trading sessions there was a feeling that big pharma stands a chance of taking on the virus.

That being said, many countries are still battling against Covid-19. There were in excess of 60,000 new cases yesterday in the US, while there were 312 deaths. The infection rate remains high, but at least the fatality rate is relatively low. The situation in Florida is getting worse as the growth in the number of new cases was 4.7%, while the seven day average was 4.4%.

Robert Kaplan, the head of the Federal Reserve Bank of Dallas, issued a mixed statement yesterday. The central banker expressed concerns in relation to the infection rate, and he said the Fed might be required to do more should assistance be needed. Mr Kaplan also said the Fed might row back on its stimulus packages should the economy improve.

The NASDAQ 100 set a fresh record high yesterday, a few hours into the trading session. The bullish run didn’t last long as the tech focused index finished down more than 2%, and the S&P 500 closed down nearly 1%. The usual suspects – Apple, Amazon, Netflix, Facebook and Google’s parent, Alphabet – all set all-time highs, but finished lower.

US earnings season will kick-off today as the latest quarterly numbers from JPMorgan, Wells Fargo and Citigroup will be posted. In April, the major banks collectively put aside more than $25 billion for provision for bad debts, the view is that the rate of loan defaults will surge on account of the pandemic.

Last month, the Fed carried out a stress test, and in one extreme scenario, the central bank cautioned that total bad debts provisions could be $700 billion. Dividends will be in focus as the Fed said that pay-outs must be capped at current rates, and there has been speculation that dividends could be cut in an effort to conserve cash.

It was a mixed day for commodities yesterday. The slide in the US dollar helped gold. Silver, copper and palladium were also helped by the move in the greenback, and the overall feel-good factor helped the industrial metals too. Oil on the other hand lost ground as there was talk that OPEC+ are looking to taper off the steep production cuts that were introduced in May. Last month WTI and Brent crude hit three month highs, but they failed to retest those levels since, because of the pausing of the reopening of economies.

Overnight, China posted its trade data for June. Imports were 2.7%, and economists were expecting -10%, keep in mind the May reading was -16.7%. Exports came in at 0.5%, and the consensus estimate was -1.5%, while the May reading was -3.3%. The rebound in imports and exports points to a turnaround in the global economy. It is possible the positive exports reading was largely because of Western government’s demand for personal protective equipment.

Rising tensions between the US and China in relation to Beijing’s territorial claims in the South China Sea has weighed on sentiment. Hong Kong is reintroducing tougher restrictions and a rise in coronavirus cases in Victoria, Australia, has impacted the mood too. Stocks in Asia are in the red, and European markets are called lower.

At 7am (UK time) the UK will release a number of economic reports. The GDP reading for May on an annual basis is tipped to be -20.4% and that would be an improvement on the -24.5% posted in April. The monthly reading is expected to be 5.5%, and keep in mind the April reading was -20.4%. UK industrial output, manufacturing output and construction output are expected to be 6%, 8% and 14.5% respectively.

At the same time, the final reading of German CPI for June will be posted and the consensus estimate is 0.8%.

The German ZEW economic sentiment report for July is tipped to be 60, and that would be a dip from the 63.4 recorded in June. It will be released at 10am (UK time).

Eurozone industrial production will be announced at 10am (UK time) and the May reading on a monthly basis is tipped to be 15%, and that would be a huge rebound from the -17.1% posted in April.

US headline CPI is expected to rebound to 0.6% from 0.1% in May. The core reading is tipped to be 1.1% and that would be a fall from the 1.2% that was posted in May.

EUR/USD – since late June it has been in an uptrend, and a break above the 1.1400 zone might put 1.1495 on the radar. A break below the 1.1168 area might pave the way for 1.1049, the 200-day moving average, to be targeted.

GBP/USD – has been in an uptrend recently, and should the positive move continue, it might target 1.2690, the 200-day moving average. A move through that level should put 1.2813 on the radar. Thursday’s candle has the potential to be a gravestone doji, and a move lower could see it target 1.2432, the 100 day moving average. A drop below 1.2251, might bring 1.2076 into play.

EUR/GBP – yesterday’s daily candle has the potential to be a bullish reversal, and if it moves higher it could see it target 0.9067 or 0.9239. A break below the 50-day moving average at 0.8949, could put the 0.8800 zone on the radar.

USD/JPY – has been drifting lower for the last month and support could come into play at 106.00. A rebound might run into resistance at 108.37, the 200-day moving average.

FTSE 100 is expected to open 78 points lower at 6,098

DAX 30 is expected to open 239 points lower at 12,560

CAC 40 is expected to open 91 points lower at 4,965

By David Madden (Market Analyst at CMC Markets UK) 

Healthy Start for Europe, G4S Jumps

Even though the pandemic is getting worse, stocks in Asia drove higher and the feel-good factor spilled over to this part of the world. At the back end of last week, it was reported that Gilead Sciences’, Remdesivir – a potential treatment for Covid-19 – reduced the fatality rate in patients by 62%.

BioNTech, who is working with Pfizer on a potential vaccine for the coronavirus, said they are hoping to get approval for the drug by Christmas. It seems that optimism surrounding the drug stories has overshadowed the fact that yesterday was another record day in terms of new cases, according to the WHO.

Germany’s economy minister stated the country is over the worst of the economic pain and that there should be positive growth from the third quarter onwards. The update wasn’t exactly new news as there has been a significant rebound in services, manufacturing, and industrial production in recent months, but it’s nice to hear a positive message all the same.

The bullish mood has helped the tourism sector as Ryanair, easyJet, International Consolidated Airlines, Carnival and InterContinental Hotel Group are all higher. The dip in the oil market has helped the stocks. These companies have endured a rough ride recently as tourism is very sensitive to the perceptions about the health crisis.

G4S shares are in demand this morning as the company predicts that first half earnings will significantly top analysts’ forecasts. The interim results will be brought forward to the week commencing the 20th July. The consensus estimate is for profit before interest, tax and amortisation of £159 million. Keep in mind the metric last year was £212 million.

Big Yellow Group, the self-storage facility company, acquired a site in Wapping, London, for £18.6 million. The site is adjacent to one of its existing facilities, and the group is hoping to have a 125,000 square foot self-storage facility and 150 residential units across both sites. The fact the company is expanding its operation amid a pandemic, suggests that it is confident in its outlook.

The aviation industry has been rocked by the health crisis, but that hasn’t stopped Wizz Air from expanding its business. Today, the low-cost airline confirmed that it will launch its Abu Dhabi operation on 1 October. The company recommenced flights in May, and in recent months it was quick to point out that it has one of the strongest balance sheets in the sector.

Oil is in the red as there is talk that Saudi Arabia are keen to lift output. In April, OPEC+ announced that it would be cutting production by 9.7 million barrels per day in the facing of falling demand. The record production cuts, combined with the reopening of economies helped oil hit a three month high last month. Now we are seeing some weakness in the energy market as there is chatter about reversing the steep production cuts.

Volatility in the currency market has been low. EUR/USD has been given a little lift by the continued weakness in the greenback. Sterling is lower versus the euro and the pound.

Gold, silver and copper have extended their gains from last week. The softer US dollar has assisted the metals.

Pepsi Co will be in focus today as it will release its second quarter figures. The first quarter update was well-received. EPS were $1.07, and that topped the $1.03 forecast. Revenue increased by 7.7% to $13.88 billion, while equity analysts were expecting $13.21 billion. The group benefited from people bulk buying soft drinks and snacks on the run-up to the lockdowns so that helped revenue. Not surprisingly, the guidance was pulled. The closure of bars, restaurants, cinemas, theatres, and sporting venues is likely to impact the second quarter numbers.

We are expecting the Dow Jones to open 107 points higher at 26,182, and the S&P 500 is called up 10 points at 3,195.

For a look at all of today’s economic events, check out our economic calendar.

By David Madden (Market Analyst at CMC Markets UK)