Encouraging results from vaccine patient trials provide boost for markets - James Rowbury

Markets were volatile this week as some countries announced shop and business closures due to fears of a second wave of COVID-19 cases, while others ease lockdown measures to speed up their economic recovery.

Sentiment in the markets was generally boosted by the announcement of encouraging results from coronavirus vaccine patient trials – the FTSE 100 rose 2.33% over the week.

New figures suggest that between March and June 2020, the number of workers on UK company payrolls fell by 649,000 as the number of people claiming work-related benefits reached 2.6m.

Although there were no official changes to the overall unemployment rates, there are now over 47,000 more young people unemployed compared to last year, highlighting the disproportional effect of the pandemic on youths.

The number was not as severe as it had been expected; however, economists claim that the full consequences of the pandemic on employment will not be determined until the government’s furlough scheme ends in October.

On Tuesday, the Government instructed telecoms firms to remove all of Huawei’s 5G equipment out of their networks by 2027 and banned mobile providers from buying new Huawei 5G products after 31 December 2020.

The move followed sanctions imposed by Washington, which claimed the firm posed a national security threat to the UK.

The cost of the move, added to earlier restrictions, will add up to £2bn and will delay the deployment of 5G in the UK by up to 3 years. 5G technology allows for faster internet speeds and capacity to support more wireless devices.

Digital Secretary Oliver Dowden stated that it was the right decision to make for the UK’s telecoms networks, national security and economy. Huawei, however, stated that the move will “move the UK in a digital slow lane”.

Early this week, most US stocks closed lower after technology stocks fell and following major surges in coronavirus cases in California.

The state’s Governor Gavin Newsom instructed bars and restaurants to close again and retailers, gyms, churches and non-essential offices were also asked to close in the most critical areas, such as Los Angeles.

On Wednesday, a further 60,711 cases were reported, bringing the total number of US confirmed cases to over 3.4m.

Yet, by midday that day both US and UK stocks were higher as investors seemed more positive following recent updates from the biotech firm Moderna, who is leading the fight against

COVID-19.

Moderna reported that after achieving encouraging results from testing, the final stages of human trials for a vaccine will begin this month.

The leader of the US COVID-19 Task Force, Anthony Fauci, stated results were “encouraging”, driving Moderna’s shares up 16%.

Yorkshire-based chemical manufacturer Croda International has announced its agreement to buy Avanti for up to US$260m. Avanti is a technology-rich company which operates globally from the US, it specialises in the development and production of high-purity lipids, normally used in next generation drug delivery technology and vaccines.

Lipids technologies ensure that active pharmaceutical ingredients are released in a targeted, controlled and extended manner. Avanti’s products and services are also used by thousands of pharmaceutical and biotechnology companies.

The acquisition is expected to double Croda’s research and development capability in the drug delivery sector. Croda’s CEO Steve Foots stated that the acquisition will enhance Croda’s presence throughout the pharma product lifecycle. The news was met positively, as the firm’s share price gained 4.13%.

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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