Thursday, December 3, 2020

Pfizer’s Stock Spikes as Covid-19 Vaccine Gets UK Nod

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News shaping
the markets today

     

What’s happening: Pfizer’s shares gained on Wednesday after the company received an emergency use authorisation for its covid-19 vaccine in the UK.

What happened: The UK became the world’s first country to approve a vaccine for the deadly coronavirus after completion of its Phase 3 trials.

The authorisation clears the way for the immunisation process to begin for the vaccine developed by Pfizer and its German partner BioNTech. Investors remain concerned, however, about the logistical challenge in the distribution of the vaccine.

Why it matters: The UK government had reached an agreement with Pfizer and BioNTech for 40 million doses of their covid-19 vaccine, which showed 95% efficacy in preventing infections in the late-stage trials. The companies will deliver the agreed doses through this month and 2021. British Health Secretary Matt Hancock said 800,000 doses will be immediately availability for residents of the UK.

Investor sentiment for Pfizer’s shares were lifted by the Medicines and Healthcare Products Regulatory Agency saying that the vaccine met its “strict standards of safety, quality and effectiveness.” The UK government is preparing for a rollout of the vaccine as early as next week.

The UK government faces the challenge of efficiently supplying the shots across the country, which reportedly has the highest death rate in Europe. The company’s covid-19 vaccines required to be stored an ultra-low temperature, which poses a major logistical challenge. The Brexit deal not being reached yet could result in further supply chain disruption.

Meanwhile, the companies await an approval of their vaccine from the US FDA, which they expect by mid-December. A decision from EU regulators is also expected during the same time. Pfizer also announced the signing of a deal with the Mexican Health Ministry to supply 34.4 million doses of the covid-19 vaccine.

China, on the other hand, has already issued emergency use authorisation for three vaccines, while Russia approved the Sputnik V vaccine in August, despite these vaccines still being in late-stage trials.

How shares responded: Pfizer’s shares gained 3.5% to close at $40.80 on Wednesday, with the stock adding another 1.6% in after-hours trading. BioNTech’s stock climbed 6.2% to settle at $121.09 and rose another 1.4% in extended session. London’s FTSE 100 index also spiked 1.2% in the previous session with the positive covid-19 news.

What to watch: Investors will monitor the UK government’s decisions to efficiently distribute the covid-19 vaccine across the country and the challenges faced. Markets will also keep an eye on Pfizer’s ongoing tests to transport its vaccine at temperatures higher than -94 degrees Fahrenheit, which will ease logistical challenges for all countries.

The Markets Today

     

Crude oil will be in focus today ahead of the OPEC+ (Organization of the Petroleum Exporting Countries and other allies) group meeting.

Context: Crude oil settled higher on Wednesday on news of the UK clearing a covid-19 vaccine and a decline in crude oil inventory.

Details: The OPEC+ group is set to meet today to decide next year’s oil production policy. The group was earlier scheduled to meet on Tuesday, but the meeting was postponed.

The group had announced output cuts of 7.7 million bpd (barrels per day) through this year due to the covid-19 crisis impacting energy demand. Markets are expecting the group to roll those cuts into next year amid the resurgence of infections in various countries.

Britain became the first Western country to issue an approval to a covid-19 vaccine, moving ahead of the US and EU in the efforts to return to normalcy. Hopes of economies recovering after the vaccines are distributed and a subsequent rebound in oil demand kept investor sentiment positive.

Traders were also encouraged by news of a decline in the US crude inventories, which fell by 679,000 barrels in the week ending November 27, according to the EIA’s (Energy Information Administration) latest figures. This compared favourably with the API’s (American Petroleum Institute) data showing a 4.15 million-barrel build for the same week.

US oil production climbed to its strongest level since May, rising 100,000 bpd last week.

Brent crude oil gained 2% to reach $48.36 per barrel on Wednesday, while WTI (West Texas Intermediate) crude rose 1.6% to settle at $45.28 per barrel.

What to watch: Markets will keep an eye on the OPEC+ group meeting scheduled for later today, expecting output cuts in 2021.

Covid-19 remains a major concern for traders, with total cases exceeding 64.4 million worldwide.

Other Markets: US indices closed mostly higher on Wednesday, with the Dow Jones index and S&P 500 up by 0.20% and 0.18%, respectively, and the Nasdaq 100 trading down 0.05%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Spain’s services PMI, Italy’s services PMI and composite PMI, France’s services PMI, composite PMI and retail sales, Germany’s services PMI and composite PMI, Eurozone’s services PMI, composite PMI and retail trade, UK’s services PMI and composite PMI, Brazil’s gross domestic product, services PMI and composite PMI as well as the US Challenger job cuts, initial jobless claims, composite PMI, services PMI, ISM non-manufacturing PMI and EIA’s natural gas stocks.