Archives of “October 2020” month

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A market perspective: How the race for a COVID-19 vaccine will affect pharmaceutical companies

  
Analysis, Education

Ever since the COVID-19 virus emerged and evolved into a global pandemic, investors have shifted their focus away from small biotech firms to larger pharmaceuticals with robust and structured manufacturing capabilities.

Once the COVID-19 vaccine is discovered, it may generate in excess of $10 billion dollars in annual revenue, but investors are betting that even if a small biotech company with limited funding and equipment discovers the vaccine, a larger company will most likely buy the drug from them.

Alternatively, the smaller company that discovered the drug and the larger company with the production and distribution capability could merge.

Gilead and Eli Lilly, two of the pharmaceutical companies taking center stage in the COVID-19 vaccine race, are foreseeing significant growth in their share value and a rise in innovation in the infectious disease area.

AstraZeneca’s growth in China took a hit given the Chinese economic situation due to the outbreak, and even more so in the EU and the US where large fractions of AstraZeneca’s total revenue is generated. Therefore, AZ joined with Sanofi in an effort to find a vaccine, which will eventually help them regain some of their losses. (more…)

More US stimulus talk expected in the day ahead

  
  Analysis

Mnuchin and Pelosi are said to speak again later today

FOX News’ Chad Pergram tweets on the matter:

Pelosi/Mnuchin expected to speak again today about narrow coronavirus bills today. Specifically for airlines

Hope springs eternal but I don’t see how or why the Democrats will want to pursue piecemeal action on the virus bill. With Biden leading the polls and suggestions of there being a ‘blue sweep’, they have some added leverage in negotiations – for now at least.

Economic data coming up in the European session

  
  Analysis
Major currencies are generally little changed but the kiwi did get a bit of an early knock amid negative rates talk here before recovering a little in the past few hours.
US stocks roared back overnight as the market grew less pessimistic about the halt in stimulus talks. Perhaps the focus on the wider polls and a possible ‘blue wave’ – in which bigger stimulus will follow after – is helping with sentiment somewhat.
US futures are slightly higher once again so that should keep the market in a calmer mood as we look towards European morning trade.
In terms of economic data, once again there isn’t much to really shake things up so look out for Brexit headlines potentially and some central bank talk in Europe today.
0545 GMT – Switzerland September unemployment rate
Prior release can be found here. Much like jobless rate in most countries, it is tough to read too much into the data here as the furlough program is masking the true effects seen in the labour market amid the virus crisis. A minor data point.
0600 GMT – Germany August trade balance data
Prior release can be found here. Both imports and exports are expected to improve further in August, though once again they still remain well below pre-virus levels. The recovery process is a long one so this will partially reflect that narrative.
1130 GMT – ECB releases its account of the September policy meeting
The September meeting statement can be found here. This is generally seen as the minutes to the monetary policy meeting but it shouldn’t reveal much of anything new. That said, there might be some interesting observations if you take this report into consideration. The ECB is still generally in ‘wait and see’ territory but the next steps will be of much importance since euro area inflation is threatening deflationary pressures and the second virus wave may yet derail the economic recovery in the coming months.
That’s all for the session ahead. I will outline the central bank speakers in a separate post later in a bit. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

BOJ’s Kuroda: Japan economy remains in a severe situation but starting to pick up

  
Analysis, Economy

Comments from the BOJ Governor:

  • Will watch impact of COVID-19 and take additional easing steps if needed without hesitation
  • Japan consumer prices likely to fall for the time being
  • Consumer prices likely to turn positive thereafter, gradually accelerate pace of increase as economy improves
This is a generally upbeat take but in like with what we’ve heard before.

Even Trump-friendly polls are showing him with a huge deficit

  
Analysis, Politics

Rasmussen Reports has been a Trump-friendly firm since he first arrived as a candidate. It was one of the few pollsters that predicted he would win the Presidency and their numbers are often touted by the President himself.
Today though, they published a poll with Trump losing 52%-40% to Biden with just 4% undecided.
“President Trump’s debate performance followed by his coronavirus diagnosis appear to be digging an even deeper hole for him this week,” Rasmussen said.
RealClearPolitics has Biden up 9.7 points.
Trump Biden
Rasmussen daily Trump approval rating is also at its lowest since June at -15. It had perked up to +4 on Sept 18 but that was the day Ruth Bader Ginsberg died and it’s been downhill steadily since.
Other state polls today:
  • Texas – even
  • Iowa – Biden +1
  • Nevada – Biden +6
  • Ohio – Biden +1
  • Pennsylvania – Biden +13
  • Iowa – Biden +5
  • Florida – Biden +11
Likely a big reason that US equities stormed back today were bets on a blue wave followed by a huge stimulus package.
In the 2016 election, Clinton never hit 50% and there were far more undecideds. It’s going to be very tough for Trump to turn this around.

US indices close sharply higher. Dow has best day since July

  
Analysis, US Market
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S&P index has all sectors in the green

The major US stock indices are closing sharply higher on hopes for targeted coronavirus aid

  • All 30 Dow stocks closed in the green
  • All 11 S&P sectors closed higher
  • Dow is up nearly 600 points at the highs
  • Stocks close higher to last 3 trading days
  • Dow closes at the highest level since September 2
  • Dow has best day since July
  • The gains today erased the losses (and then some) from yesterday. Yesterday the S&P fell -1.4%. The NASDAQ index fell -1.57% and the Dow industrial average fell by -1.34%.
The final numbers are showing:
  • S&P index rose 58.47 points or 1.74% at 3419.43. The high reached 3426.26. The low extended to 334.56
  • NASDAQ index closed up 209.99 points or 1.88% at 11364.59. The high reached 11380.55. The low reached 11258.35
  • Dow rose 530.7 points or 1.91% at 28303.46. The hi reached 28369.66. The low extended to 27971.36
Some winners include:
  • First Solar, +7.08%
  • Netflix, +5.71%
  • American Express, +4.35%
  • United Airlines, +4.30%
  • Corning, +4.25%
  • Beyond Meat, +4.0%
  • Salesforce, +3.89%
  • Western Digital, +3.56%
  • Slack, +3.53%
  • Boeing, +3.16%
The worst performing Dow stocks include:
  • Verizon, +0.2%
  • Walmart, +0.2%
  • Merck and Company, +0.51%
Other losers today included:
  • Exxon Mobil, -2.49%
  • GoodRx, -1.14%
  • Lyft, -0.49%
  • Papa John’s, -0.38%
  • Crowdstrike, -0.34%
  • Facebook, -0.27%
  • Raytheon, unchanged
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