Monday, December 21, 2020

Moderna Covid-19 Vaccine Wins FDA Clearance

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News shaping
the markets today

     

What’s happening: The US FDA (Food and Drug Administration) issued an emergency use authorisation (EUA) to Moderna’s vaccine late Friday.

What happened: Moderna's candidate is the second vaccine to receive approval in the US following the one developed by Pfizer in collaboration with BioNTech.

Despite Pfizer’s vaccine gaining approval earlier, Moderna has an upper hand in distribution, as its vaccine does not require any special equipment for storage. Pfizer’s vaccine, on the other hand, needs ultracold freezers for storage.

Why it matters: Over the past few weeks, the US has witnessed a spike in covid-19 cases, with daily infections climbing to record levels, hospitals facing a shortage of ICU beds and a rise in fatalities. The total case count in the country has surpassed 17.8 million, with more than 317,000 deaths.

Markets breathed a sigh of relief when, late Friday, the FDA issued its authorisation to Moderna’s vaccine for use in adults. With this latest development, two of the six vaccines identified by the Trump’s administration Operation Warp Speed program have now been approved.

Applications for an FDA review by AstraZeneca and Johnson & Johnson, which are also part of the program, are likely be submit next year.

The US FAA (Federal Aviation Administration) also announced its approval for the use of the company’s vaccine for pilots and air traffic controllers.

Moderna’s vaccine also needs to be administered in a two-dose regimen, like the one from Pfizer. The company didn’t lose any time after gaining FDA clearance and started shipping its vaccine on Sunday, with the first shots likely to be given from today.

So far, investors had been anxious after reports of Pfizer’s vaccine causing allergies. The FDA is investigating the allergic reactions, which includes a severe reaction known as anaphylaxis. Markets are likely to take a wait-and-watch approach, since Moderna’s vaccine contains an ingredient called polyethylene glycol, which is also likely to cause allergic reactions.

The US has spent billions of dollars to buy 200 million doses of Modern’a vaccine, which is sufficient to vaccinate 100 million people. The country’s government also has the option to buy another 300 million doses from the company.

How shares responded: Moderna’s shares gained 2.2% to $143.37 in after-hours trading on Friday, after declining 2.6% during the regular trading session. The stock has surged 617% year to date.

What to watch: Investors look forward to a smooth rollout of Moderna’s vaccine in the US, since it is much easier to distribute than Pfizer’s vaccine. Markets will also keep an eye on other major pharma companies speeding up their vaccine development process to bring life back to normal in 2021. Investors will also monitor news of any allergic reactions to Moderna’s vaccine.

The Markets Today

     

US stocks will be in focus today after the Congress inked a last-minute coronavirus stimulus deal.

Context: Wall Street stocks closed lower on Friday with lawmakers failing to reach an agreement on the stimulus package. However, the Congress reached a deal on the $900 billion covid-19 relief package just a few hours before the government’s midnight deadline.

Details: The inking of the last-minute coronavirus stimulus deal follows talks that had stretched for months. Senate Majority Leader Mitch McConnell announced over the weekend that the government had reached an agreement over the $900 billion package, which would result in direct payments to Americans, with hopes to trigger demand and revive the economy from the coronavirus-led crisis.

The agreement has not been formally passed yet, and investors will look forward to a formal announcement today.

On Friday, the Federal Reserve announced the relaxation of some rules, allowing the country’s big banks to restart share repurchases during the first quarter of 2021.

The stock market witnessed massive trading volumes on Friday with Tesla all set to make its historic entry into the S&P 500 index. With a market capitalisation of over $650 billion and a 730% rally so far this year, the electric vehicle maker will join the index as the seventh-largest company. Tesla’s shares also jumped to a record high on Friday.

All three major indices had climbed to new intraday highs during Friday’s session, following a record close in the prior session. However, the gains disappeared quickly as investors turned their focus to stimulus talks.

The Dow Jones declined 124.32 points to close at 30,179.05 on Friday, after falling 270 points earlier in the session. The S&P 500 slipped 0.4% to settle at 3,709.41, after gaining for three consecutive sessions. The Nasdaq 100 lost 0.1% to close at 12,755.64.

What to watch: The economic calendar for the US is light today, with only the Chicago Fed National Activity Index scheduled to be released. The index had risen to 0.83 in October, versus a reading of 0.32 in the prior month.

The rising covid-19 cases remain a major concern for investors, with total worldwide cases surpassing 76.7 million.

Other Markets: European trading indices closed lower on Friday, with the FTSE 100, German DAX 30 index and French 40 down by 0.33%, 0.27% and 0.39%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Turkey's consumer confidence and government debt, UK’s CBI distributive trades, Mexico’s retail sales, Canada’s prices of new homes, Brazil’s government revenues as well as the Eurozone’s consumer confidence indicator.