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News

Moderna’s Q2 print injects positivity in markets

 

Thursday, August 04, 2022, 8.45am GMT

The news shaping the markets today

Both the US and Italy approved Finland and Sweden’s accession to NATO (North Atlantic Treaty Organisation), despite threats by Russia. The US dollar index traded slightly lower this morning.


Australia’s trade surplus widened to a fresh record high of A$17.67 billion in June, from A$15.02 billion a month ago. The latest reading topped market estimates of A$14 billion, lending support to the AUD/USD forex pair.


Ireland’s services PMI rose to 56.3 in July, from June’s six-month low of 55.6. Despite this being the 17th consecutive month of expansion in the country’s services activity, the EUR/USD pair declined slightly in forex trading this morning.


Brazil’s central bank raised the Selic rate by 50 bps to 13.75% at its latest meeting. However, the BRL/USD forex pair remained under pressure even after the announcement.


France’s government budget deficit narrowed to €76.1 billion in the January to June period, from €131.3 billion in the first six months of 2021. The CAC 40 index gained around 1% on Wednesday.

 

What’s happening: Shares of Moderna rose sharply on Wednesday after the company reported stronger-than-expected earnings for the second quarter.

What happened: Moderna maintained its covid-19 vaccine sales estimates, supporting investor confidence in the stock.

Although investors sent shares higher, there was some concern around the pharma company recording a substantial charge related to its vaccine.

How were the results: The Cambridge, Massachusetts-based company reported a decline in earnings for the second quarter, but the figure still exceeded market views.

  • Revenues rose to $4.75 billion in the latest quarter, from $4.34 million a year earlier. The figure topped market expectations of $4.07 billion. However, on a sequential basis, sales contracted by around 22%.
  • Earnings came in at $5.24 per share, down from $6.46 in the year-ago quarter, but surpassed the consensus estimate of $4.59 per share.

Why it matters: Moderna and its major rival Pfizer are largely dependent on orders for booster doses to gain more covid-19 vaccine contracts from higher-income nations.

Moderna started developing booster doses for the original coronavirus and Omicron’s BA.4 and BA.5 subvariants. The pharma company signed a massive deal worth $1.74 billion with the US government last week.

Moderna’s sales from its covid-19 vaccine came in at $4.5 billion in the second quarter. However, the company booked charges worth $499 million related to the expiration of vaccines.

Operating income fell to $2.45 billion, from $3.06 billion in the year-earlier quarter. The company exited the second quarter with $18.1 billion in cash, cash equivalents, and investments.

Moderna’s board authorised an additional share buyback program for $3 billion.

Management reiterated their covid-19 vaccine sales projection of around $21 billion for 2022, based on current agreements, with orders for new booster doses expected to offset the cancellation of orders through the Covax program.

How shares responded: Moderna’s shares jumped 16% to close at $186.49 on Wednesday, following the release of strong quarterly results. The stock has lost more than 20% year to date.

What to watch: Investors will be keeping an eye on Moderna’s Omicron-blocking booster dose, which could provide another boost to overall sales. Markets will also monitor the company’s other four drugs in Phase III testing.

The markets today

The British pound will be in focus today ahead of the Bank of England’s interest rate decision

Context: The GBP/USD edged lower on Wednesday, after reaching a one-month high on Monday.

Details: Forex traders remained on the sidelines ahead of the Bank of England’s policy announcement, scheduled for later today. The BoE has already announced five rate hikes in a row and is widely expected to raise rates again today.

UK’s inflation rate has been accelerating with the annual rate surging to a new 40-year high of 9.4% in June, from 9.1% in May.

The strength in the greenback also exerted some pressure on the pound. The US dollar index, which measures the currency’s performance versus a basket of major peers, gained around 0.25% to reach 106.51 on Wednesday.

On the economic data front, the S&P Global/CIPS UK services PMI fell to 52.6 in July, from a preliminary reading of 53.3, signalling the softest expansion in the country’s services sector in 17 months. The country’s composite PMI was also revised lower to 52.1 in July, versus a preliminary reaching of 52.8, pointing to the weakest expansion rate since February 2021.

The GBP/USD forex pair fell around 0.2% to close at 1.2146 on Wednesday. However, the FTSE 100 closed higher by 0.49% at 7,445.68, snapping a two-session decline.

What to watch: Markets await the Bank of England’s interest rate decision today. The central bank, which boosted the Bank Rate by 25bps to 1.25% at its June meeting, is expected to increase its benchmark rate to 1.75%.

The release of economic data on new car registrations and construction PMI will also remain in focus today. The S&P Global/CIPS construction PMI had declined to 52.6 in June, from 56.4 in May and is expected to decline further to 52.2 in July.

Other Markets: US indices closed higher on Wednesday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 1.29%, 1.56% and 2.73%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/CHF – 0.9606 and 0.9612 Negative
EUR/JPY – 135.90 and 136.12 Positive
Gold – 1783.06 and 1784.76 Positive
Platinum – 890.14 and 892.39 Positive
Dow Jones – 32790.91 and 32873.80 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0164, -0.03%) Dow ($32,755, -0.05%) Brent ($96.95, 0.2%)
GBP/USD (1.2150, 0.03%) S&P500 ($4,152, -0.10%) WTI ($90.92, 0.3%)
USD/JPY (133.80, -0.04%) Nasdaq ($13,244, -0.21%) Gold ($1,786, 0.6%)

What else to watch today

Germany’s factory orders and construction PMI, Eurozone’s construction PMI, France’s construction PMI, Italy’s construction PMI, Mexico’s consumer confidence, Turkey’s gross foreign exchange reserves, US Challenger Job cuts, balance of trade, exports, imports, initial jobless claims, continuing jobless claims and natural gas stocks change, as well as Canada’s balance of trade, value of building permits, exports and imports.

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