Wednesday, August 12, 2020

Moderna Shares Spike on $1.5 Billion US Deal

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News shaping
the markets today

     

What’s happening: Shares of Moderna Inc jumped in extended trading on Tuesday after the drug-maker entered into an agreement with the US government for its covid-19 vaccine candidate.

What happened: As the US is the worst affected country from the coronavirus outbreak, leading in both infections and deaths, the Trump administration has allocated more than $10 billion for a covid-19 vaccine solution and signed deals with various drug-makers.

While Moderna’s vaccine has already advanced to the last stage of testing, the agreement with the government pays out in full only if the company is able to meet the agreed timelines for the delivery of its vaccine.

Why it matters: The US government had already inked deals with Johnson & Johnson, Pfizer, AstraZeneca, and Sanofi, for their covid-19 candidates, provided they receive regulatory approvals.

Some agreements also give an option to the US government to buy more vaccine doses from the drug makers.

Moderna's coronavirus vaccine candidate, mRNA-1273, is among the few that is already in the final stage of trials and is on course to completing the trials by September.

As per the terms of the deal, the US will acquire 100 million doses of Moderna’s vaccine for about $1.5 billion (£1.15 billion) under its Operation Warp Speed program and have the option to purchase an additional 400 million doses.

Apart from signing this deal, the US government agreed to give Moderna around $1 billion for funding its research and development efforts, taking the total funding commitments to the biotech company to about $2.5 billion.

How shares responded: Shares of Moderna climbed 11.3% to $76.75 in after-hours trading on Tuesday following news of the US government deal. The stock has gained more than 252% year to date.

What to watch: All countries and companies are in the race to launch the first covid-19 vaccine. Earlier this week, Russian President Vladimir Putin announced the launch of the world’s first coronavirus vaccine, although the drug candidate had not completed all trials. Investors will keep an eye on American and European pharma majors for a successful launch. Markets will closely monitor developments at Moderna, as the biotech company takes its covid-19 candidate through Phase III trials.

The Markets Today

     

Crude oil will be in focus today, ahead of the EIA’s (Energy Information Administration) data on crude stockpiles.

Context: Oil futures closed lower on Tuesday, after recording gains earlier in the session. The downturn was curtailed by expectations of a decline in US oil supplies and hopes of another stimulus package supporting the American economy.

Details: In its monthly report on Tuesday, the EIA raised its projections for the prices of both US and global benchmark oil for 2020, while lowering its US crude output forecast for the year.

Markets continued to keep a close eye on the developments related to the US government’s new stimulus program, with the White House and US lawmakers indicating their willingness to resume talks.

WTI (West Texas Intermediate) crude for September delivery declined 0.8% to finish at $41.61 per barrel on the NYMEX (New York Mercantile Exchange), after surging as high as at $42.94 earlier in the session.

The global benchmark, October Brent crude, slipped 1.1% to settle at $44.50 per barrel on ICE Futures Europe, after hitting intraday high of $45.79 on Tuesday.

September natural gas gained 0.8% to close at $2.171 per million British thermal units on Tuesday.

What to watch: Markets await the EIA’s report on crude inventories. Analysts expect domestic crude stockpiles to decline 4.7 million barrels for the week ending August 7. Gasoline supplies are projected to fall by 2.1 million barrels, with distillate inventories likely to decline by 100,000 barrels last week.

Investors will also monitor the covid-19 figures, with the total number of cases surpassing 5.1 million in the US.

Other Markets: European indices were trading mostly lower at 8:30am GMT, with French 40 and Dax 30 index down by 0.3% and 0.3%, respectively. The FTSE 100 had gained edged higher by 0.1%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

South Africa’s retail sales, Brazil's retail trade, China’s foreign direct investment as well as the US MBA mortgage applications, annual inflation rate and government budget.