Tuesday, November 17, 2020

Another Covid-19 Vaccine Candidate Exceeds Expectations

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News shaping
the markets today

     

What’s happening: Shares of Moderna Inc. moved higher on Monday after the company released encouraging data for its coronavirus vaccine candidate.

What happened: Against the backdrop of the US reporting record high new covid-19 cases several times this month, markets cheered positive vaccine data from Moderna, which surpassed even Pfizer’s encouraging announcement last week.

The news led to another spike in the global stock markets. Amid the broad rally, investors dumped Pfizer’s shares after the announcement from Moderna.

Why it matters: News of Moderna’s vaccine candidate surpassing expectations in a late-stage trial after Pfizer’s positive data last week fuelled hopes of a faster recovery in the global economy.

Pfizer had reported last week that its covid-19 vaccine candidate, which it is developing in collaboration with BioNTech, had achieved more than 90% efficacy in the first interim analysis from a Phase III study. Moderna went a step further on Monday to announce that its experimental vaccine had proven to be 94.5% effective in preventing coronavirus, according to the interim data in a late-stage study.

The good news didn’t end there. Pfizer’s vaccine requires to be stored at -94 degrees Fahrenheit, which raised logistics concerns. Moderna said that its vaccine can be kept at normal fridge temperatures for up to 30 days and would last for as long as 6 months when stored at -4 degrees Fahrenheit. A longer storage life makes it possible to ship the vaccine to rural residents and other countries around the world.

Moderna said it expects to file for EUA (Emergency Use Authorization) with the FDA (Food and Drug Administration) shortly and projected making 20 million doses ready for the US market by the end of this year. The company expects to supply between 500 million and 1 billion doses of its vaccine worldwide next year.

Encouraged by the positive vaccine news, investors sent the Dow Jones index higher by 470 points to 29,950 on Monday. The S&P 500 added 1.16% to close at 3,626, boosted by a sharp upturn in travel-related stocks, which have been severely hit by the pandemic. The Nasdaq 100 rose only 0.8%, with investors being weary of tech stocks being adversely impacted by the lifting of stay-home and remote working restrictions.

How shares responded: Moderna’s shares climbed 9.6% to $97.95, while Pfizer’s stock fell 3.3% to close at $37.33 on Monday. Moderna’s stock has added over 400% year to date, while Pfizer’s shares have lost around 5% this year.

What to watch: Investors look forward to the further release of data from Pfizer and Moderna, as well as for the companies to receive authorization from the government for the distribution of their vaccines. Markets will keep an eye on other pharma majors developing covid-19 vaccines.

Investors will also monitor the rising covid-19 cases in the US, which has crossed 11 million, with around 247,000 fatalities.

The Markets Today

     

The Canadian dollar will be in focus today, ahead of important economic reports from the country.

Context: The Canadian dollar gained versus the greenback on Monday, with positive news related to covid-19 vaccine lifting investor sentiment. Growth in Canada’s domestic manufacturing sales in September also supported the loonie.

Details: The loonie started the new trading week recording gains against the US dollar, after declining sharply last week amid rising covid-19 cases globally.

The Canadian dollar was supported by rising crude prices, with the commodity being one of Canada’s main exports. US crude prices rose 4.6% to $41.99 per barrel on Monday, helping the CAD/USD trade higher by 0.4% at 1.3080.

The CAD/USD was also boosted by an increase in risk appetite on Monday following the release of positive data from another covid-19 vaccine candidate. A rise in risk appetite typically exerts pressure on the US dollar, which is widely considered a safe-haven option.

Meanwhile, Canada’s manufacturing sales grew 1.5% to C$53.8 billion in September. Although this fell short of the consensus estimates of 1.7% growth, it was enough to support market sentiment.

What to watch: Markets await data on housing starts and wholesale sales from Canada. Housing starts, which fell by 20.1% to 208,980 units in September, are expected to increase to 222,000 in October. Wholesale sales are likely to rise 0.4% in September, following 0.3% increase in August.

Investors will also keep an eye on the speech by Bank of Canada’s Governor Tiff Macklem.

Other Markets: European trading indices closed higher on Monday, with the FTSE 100, German DAX 30 and French 40 up by 1.66%, 0.47% and 1.7%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Japan’s balance of trade, Russia’s industrial production as well as US retail sales, export prices, import prices, Redbook index, industrial production, manufacturing production, business inventories, NAHB housing market index and API crude oil stockpiles.