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Beyond the Numbers

Upbeat Vaccine News May Lead To Initial Strength On Wall Street
7/13/2020 8:56 AM

The major U.S. index futures are currently pointing to a higher opening on Monday, with stocks likely to extend the rally seen last Friday.

The upward momentum on Wall Street comes as traders react to more upbeat news regarding a potential coronavirus vaccine.

Pfizer (PFE) and BioNTech (BNTX) announced that two of the companies’ four investigational vaccine candidates received Fast Track designation from the U.S. Food and Drug Administration.

The companies said they expect to start the next phase of trials as soon as later this month and are anticipating enrolling up to 30,000 subjects.

If the ongoing studies are successful and the vaccine receives regulatory approval, Pfizer and BioNTech expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.

The upbeat news on the vaccine front comes as the U.S. has reported more than 60,000 new coronavirus cases for three days in a row, with Florida seeing a record 15,299 new cases on Sunday.

Nonetheless, overall trading activity may be somewhat subdued on the day as traders look ahead to start of earnings season.

Citigroup (C), Delta Air Lines (DAL) JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS), UnitedHealth (UNH), Bank of America (BAC), Johnson & Johnson (JNJ), and Netflix (NFLX) are among the big-name companies due to report their quarterly results in the coming days.

A lack of major U.S. economic news may also keep some traders on the sidelines ahead of the release of reports on industrial production, retail sales and housing starts later this week.

Following the pullback seen on Thursday, stocks showed a strong move back to the upside during trading on Friday. With the upward move on the day, the tech-heavy Nasdaq ended the session at a new record closing high.

The major averages ended the day just off their highs of the session. The Dow surged up 369.21 points or 1.4 percent to 26,075.30, the Nasdaq climbed 69.69 points or 0.7 percent to 10,617.44 and the S&P 500 jumped 32.99 points or 1.1 percent to 3,185.04.

For the week, the Nasdaq skyrocketed by 4 percent, while the S&P 500 shot up by 1.8 percent the Dow advanced by 1 percent.

The strength on Wall Street came after Gilead Sciences (GILD) said remdesivir showed a sharp mortality risk drop when used to treat patients suffering of coronavirus.

BioNTech's CEO also told The Wall Street Journal the German biotechnology company's coronavirus vaccine candidate could be ready for approval by December.

The upbeat treatment and vaccine news overshadowed the news that the U.S. reported a record daily increase in new coronavirus cases of more than 63,000.

Airline stocks showed a substantial move to the upside on the day, driving the NYSE Arca Airline Index up by 5.8 percent The index bounced off its lowest closing level in over a month,

Significant strength was also visible among banking stocks, as reflected by the 5.2 percent jump by the KBW Bank Index.

Steel, brokerage and energy stocks also saw considerable strength, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.50 to $40.05 a barrel after advancing $0.93 to $40.55 a barrel last Friday. Meanwhile, after slipping $1.90 to $1,801.90 an ounce in the previous session, gold futures are jumping $12 to $1,813.90 an ounce.

On the currency front, the U.S. dollar is trading at 107.20 yen versus the 106.93 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1331 compared to last Friday’s $1.1300.

Asia

Asian stocks advanced on Monday as hopes for a quick economic recovery as well as reports of positive data in early stage coronavirus vaccine trials helped offset worries about a continued surge in new coronavirus cases worldwide.

Chinese shares extended last week's surge on hopes of earnings improvement. The benchmark Shanghai Composite Index surged up 59.96 points, or 1.8 percent, to 3,443.29, while Hong Kong's Hang Seng Index rose 44.71 points, or 0.2 percent, to 25,772.12.

Japanese shares hit a one-month high as a positive update from Gilead's antiviral drug to treat Covid-19 offset investor fears over surging cases. Tokyo reported 119 new coronavirus infections today, falling below 200 for the first time in five days.

The Nikkei 225 Index soared 493.93 points, or 2.2 percent, to 22,784.74, its highest close since June 10, with automakers leading the surge on upbeat industry data from China. The broader Topix closed 2.5 percent higher at 1,573.02.

Honda Motor surged 5.9 percent, Toyota Motor rallied 3 percent, Nissan Motor advanced 4.5 percent, Mitsubishi Motors jumped 6.2 percent and Mazda Motor soared 8.8 percent.

Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial rose around 3 percent, while oil company Inpex surged 6 percent and Japan Petroleum added 2.2 percent.

Australian markets rose notably as positive trial results of an experimental Covid-19 treatment overshadowed growing concerns over a fresh outbreak of the coronavirus in public housing in Melbourne's north.

Scientists in Queensland said that a coronavirus vaccine developed by them could be ready for use as early as the start of next year, with clinical trials beginning today.

The benchmark S&P/ASX 200 Index jumped 58.30 points, or 1 percent, to 5,977.50, while the broader All Ordinaries Index ended up 53 points, or 0.9 percent, at 6,089.30.

Financials led the surge, with the big four banks rising between 1.7 percent and 2.1 percent. Woodside Petroleum and Origin Energy climbed around 2 percent after oil prices rose more than 2 percent on Friday. Beach Energy shares jumped 3.5 percent.

Buy-now-pay-later firm Sezzle Inc. soared more than 22 percent after raising A$79.1 million ($55.05 million) from institutional investors. Mining heavyweights BHP and Rio Tinto rose about 2 percent, while gold miners ended on a mixed note.

Meanwhile, Oil Search lost 2 percent after it announced plans to write off around $380 million in its half-year results.

Estia Health tumbled 3.3 percent. The aged care provider said it will record a non-cash impairment charge of between A$124 million and A$148 million in its full-year results due to uncertainty related to the coronavirus.

Seoul stocks posted strong gains as investors held out hopes for a quick economic recovery despite rising Covid-19 cases. Data released by the South Korean customs office showed that the country's exports fell an annual 1.7 percent in the first 10 days of July, suggesting easing in the decline in global shipments.

Exports of memory chips, a key item, rose 7.7 percent, while exports of automobiles gained 7.3 percent over the 10-day period from a year earlier, the report revealed. The benchmark Kospi added 35.81 points, or 1.7 percent, to finish at 2,186.06.

Market bellwether Samsung Electronics rose 1.3 percent, steelmaker POSCO gained 2.8 percent, automaker Hyundai Motor climbed 3.3 percent and chemical maker LG Chem advanced 3.4 percent.

Europe

European stocks have shown a strong move to the upside on Monday as investors look ahead to the upcoming earnings season for signs of an economic recovery from the coronavirus-induced downturn.

Investors also remain hopeful that the EU 27 will make progress in agreeing on a 750 billion euro ($848.78 billion) Covid-19 recovery fund.

The European Central Bank meets on Thursday but analysts don't see any changes to the bank's ultra-easy monetary policy stance.

While the French CAC 40 Index has jumped by 1.3 percent, the U.K.’s FTSE 100 Index is up by 1 percent and the German DAX Index is up by 1 percent.

Finnish valves maker Neles has soared after striking a combination agreement with Swedish industrial group Alfa Laval. Shares of the latter also surged.

Nordic bank DNB and Nordic Semiconductor have also moved sharply higher after posting better-than-expected earnings.

Akzo Nobel N.V. has also moved to the upside after it provided a further update on recent business performance.

Novacyt has also shown a notable advance after the Anglo-French biotechnology group reported booming sales of its Covid-19 test.

G4S shares have also soared. The security firm said it expects its first-half adjusted PBITA and underlying earnings to be "significantly" above market expectations.

On the other hand, Ubisoft Entertainment has slumped after the video games maker announced staff departures following allegations of misconduct and inappropriate behavior.

Boohoo Group shares have also plunged after Standard Life Aberdeen sold two thirds of its holding in the fast fashion retailer.

U.S. Economic Reports

New York Federal Reserve President John Williams is scheduled to speak at a video webinar entitled “LIBOR: Entering the Endgame” organized by the Bank of England and the New York Fed at 11:30 am ET.

At 1 pm ET, Dallas Federal Reserve President Robert Kaplan is due to discuss his economic outlook at a National Press Club online event.

Stocks In Focus

Shares of Maxim Integrated Products (MXIM) are moving sharply higher in pre-market trading after the chipmaker agreed to be acquired by rival Analog Devices (ADI) for $20.9 billion in stock.

Theater chain AMC Entertainment (AMC) may also see initial strength after securing $300 million in new funding from investors and reaching an agreement to reduce its debt by at least $460 million.

Shares of PepsiCo (PEP) may also move to the upside after the beverage and snack giant reported second quarter results that exceeded analyst estimates on both the top and bottom lines.
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