08 September 2020

Covid-19 Vaccine News Sends UK Stocks to 3 Month Highs


News shaping
the markets today


What’s happening: UK stocks closed higher on Monday to record their best session in around three months.

What happened: AstraZeneca and GlaxoSmithKline issued updates about their respective covid-19 vaccine candidates, providing a boost to the London stock market.

However, comments from the UK Prime Minister regarding the Brexit trade deal came as a dampener and sent the British pound lower in yesterday’s session.

Why it matters: British stocks had recorded sharp losses last week due to heavy profit-taking in tech stocks. Doubts over the economy’s pace of recovery also hurt investor sentiment.

The UK witnessed a sudden surge in coronavirus cases, recording 1,175 positive cases on Saturday only to be followed by 2,988 cases on Sunday, the highest one-day number since May 22.

Following the sharp increase in infections, UK health secretary Matt Hancock said that the country is “most likely” to get a covid-19 vaccine only by early 2021.

The UK government has placed an initial order of 30 million doses of the covid-19 vaccine being developed by British drug-maker AstraZeneca in partnership with the University of Oxford. The company has started manufacturing the doses ahead of approval.

Meanwhile, the Trump administration is also looking to fast-track AstraZeneca’s vaccine approval.

AstraZeneca also announced an agreement with Australia’s CSL for manufacturing its covid-19 vaccine.

Shares of GlaxoSmithKline gained more than 4% on Monday after the drug-maker issued pricing details for its covid-19 vaccine candidate.

The British pound fell sharply yesterday after the UK Prime Minister warned of walking away from any trade deal with the EU in case an agreement is not reached by October 15.

On the economic data front, the UK recorded the biggest rise in house prices since 2016, up 5.2% in August. Shares of homebuilders gained more than 2% following the encouraging economic report.

London’s FTSE 100 climbed 2.4% on Monday, after declining for three straight sessions. The domestically-focused FTSE 250 index gained 1.7%.

What to watch: With no major economic data scheduled for release today from the UK, investors will keep a close eye on Brexit talks with the EU. Markets will continue to monitor progress on covid-19 vaccines being developed by various leading pharma companies.

The Markets Today


Crude oil will be in focus today, after closing at its lowest price in over five weeks on Monday.

Context: Oil prices declined in the previous session after Saudi Arabia announced a significant cut in monthly crude prices.

Details: The world's biggest oil exporter, Saudi Arabia, reduced October’s OSP (official selling price) for Arab Light crude for Asia by the highest margin since May. The Kingdom also cut US prices for the first time in six months.

The world’s largest importer of crude oil, China, reported a decline in oil imports to 11.18 million bpd (barrels per day) in August, from July’s 12.08 million bpd.

Crude also came under pressure after US energy firms started increasing drilling activities following the recent rebound in oil prices. On Friday,Baker Hughes reported an addition of oil rigs for the second time in the last three weeks.

The only news supporting oil prices was the progress being made by pharma companies on their respective covid-19 vaccines.

WTI (West Texas Intermediate) crude dropped 67 cents, or 1.7%, to $39.10 per barrel on Monday, after falling as low as $38.55 earlier in the session. Brent crude lost 1.5% to end the day at $42.03 per barrel, after declining to $41.51 in the session.

What to watch: Traders await reports from API (American Petroleum Institute) and EIA (Energy Information Administration) on crude oil stockpiles. The reports are scheduled for release on Wednesday and Thursday, respectively. Crude oil is likely to remain under pressure today, with WTI crude trading lower at $39.01 per barrel in the Asian session.

Investors will also continue to assess daily covid-19 numbers, with total cases in the world surging to 27.2 million.

Other Markets: Asian indices were trading higher at 7am GMT, with Japan’s Nikkei 225, China’s Shanghai Composite and Hong Kong’s Hang Seng up by 0.65%, 0.86% and 0.31%, respectively.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


France’s balance of trade and current account, Italy’s retail sales, Eurozone’s GDP growth rate and employment change, South Africa’s GDP growth and coincident index as well as the US NFIB business optimism index, economic optimism index and consumer credit.

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