Biotech firm emerges as front runner to develop Covid-19 vaccine - James Rowbury

Yet another week has seen markets move based on hopes of Coronavirus vaccines and economic rebounds from easing lockdown, as global markets rose significantly on Monday.

The US biotech firm Moderna came out as the front-runner for the development of the Covid-19 vaccine, as it released positive results for its early phase-one trial leaving investors excited for further developments.

UK markets have remained relatively unchanged since Monday, with modest daily gains and losses throughout the rest of the week.

The Office for National Statistics released inflation data showing that month-on-month April consumer prices in the UK had fallen to 0.8%, which is the lowest in over three years.

The domestic energy price cap and falling oil and energy prices were the main contributors to the fall in prices. The move puts the rate of inflation a step further from the Bank of England’s (BoE) 2% target rate, raising further question marks over its importance in today’s changing economic landscape.

In fact, according to the BoE, short-term disinflation is expected given the circumstances of the pandemic.

UK Chancellor Rishi Sunak warned that the UK economy is no longer expected to have an “immediate bounce back” from the crisis and may potentially suffer permanent damage, as unemployment numbers rose at a record pace of more than 2m from March to April.

The total number of people using the furlough scheme has also reached 10m, which is intended to help the UK economy mitigate medium-term damage, although the cost of the scheme will leave permanent debt obligations with the UK Government.

Despite the glum news, the Cboe UK 100 has risen 4.34% over the past week, helped by its 4.27% surge on Monday, prompted by Moderna’s report on the vaccine developments.

US-China tensions continue to rise and prevent global stocks from achieving further gains, as the White House released a 20-page report which highlights the predatory economic policies,

disinformation campaigns and human rights violations they accuse China of, adding fuel to the fire.

The report says that the US considers China to be gradually more constrictive and trending backwards with its policies and reforms.

The current area of contention between the global giants is the World Health Organization (WHO), as President Donald Trump threatened to permanently freeze funding to the WHO over its dealings with China around the handling of Coronavirus information.

The Federal Reserve Chairman Jerome Powell cautioned that a full US economic recovery may depend on a vaccine and it might take until the end of next year to rebound unemployment

numbers which continue to surge.

Further months of increasing job losses are expected, as US unemployment reached 14.7% in April, a post-war high.

Additionally, more than 36m have filed for unemployment benefits. However, the Trump administration remains more bullish, as the White House expects the US economy to recover by the end of this year.

The US S&P 500 has risen 3.85%, Hong Kong’s Hang Seng has increased 1.38% and Japan’s Nikkei 225 has advanced 2.09% over the past week, boosted by vaccine hopes.

Leeds-founded clothes retailer Marks & Spencer released its full-year results on Wednesday which revealed that its annual profits had fallen by a fifth.

The Covid-19 lockdown has resulted in a £145m hit in unsold seasonal clothing, with sales falling by 75% in the past six weeks.

Additionally, the retailer said that it underperformed compared to its peers due to heavier emphasis on food-to-go sales which fell as non-essential businesses closed due to the lockdown.

The company now forecasts a 70% fall in revenue for April-May with a gradual return to normality by February 2021, although recent events have revealed progress in the company’s processes and adoption of innovative technology, which will be maintained going into the future.

The share price of M&S has fallen 2.84% over the past month.

Please note that investments and income arising from them can fall as well as rise in value and you may lose some or all the amount you have invested. Past performance and forecasts are not reliable indicators of future results or performance.

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the companies mentioned.

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