Hopes for a vaccine rise as EU tensions simmer - James Rowbury

Although markets this week showed hints of volatility, investors’ sentiment was encouraged by the €750bn recovery deal agreement which aims to mitigate the economic damage caused by the coronavirus pandemic.

Further announcements regarding positive steps towards vaccine development also boosted confidence. Nevertheless, there are still no signs of the crisis being over as cases around the world continue to increase, sparking further uncertainty among investors.

AstraZeneca and Oxford University have partnered to produce a vaccine against COVID-19. The pharmaceutical giant hopes to start distributing the vaccine by the end of the year after committing to making two billion doses.

This followed initial trial results which suggested the vaccine generates a strong immune response which seems to be safe for humans. The firm stated that late-stage phase one

and two trials are currently being carried out in the UK will establish how well the vaccine can protect from COVID-19, while measuring safety and immune responses throughout different age ranges and doses.

The company is working as fast as possible and is hoping to deliver further results relating to the effectiveness and duration of the vaccine. AstraZeneca’s Chief Executive, Pascal Soriot, intends to deliver the additional results in September, although delays are expected.

The UK government has ordered 100 million doses of the vaccine, while the company’s stocks have been rising steadily since the promising announcement on Monday.

After a long weekend of talks, EU leaders have finally reached a deal on a huge recovery package following the pandemic.

The deal involved €750bn composed of both grants and loans in order to counter the effects of the virus for the 27 members. Following many disagreements relating to cost concerns, EU members agreed on the largest-ever joint borrowing scheme.

The hardest-hit countries, such as Italy and Spain, are to receive a €390bn package and a further €360bn in low-interest loans will be offered to members of the bloc.

The members were split between those who were keen to recover their economy following a heavy impact from COVID-19 and those who were more concerned about the costs of the recovery plan, such as Sweden and Denmark.

The agreement has been described as a “historic day for Europe” by French President Emmanuel Macron.

During a press briefing concerning the pandemic, US President Donald Trump, acknowledged the coronavirus crisis will “get worse” before it gets better.

This followed continued surges in cases, especially concerning southern and western US states such as Texas, Florida and California.

Furthermore, on Wednesday there were renewed fears over relations between the US and China after the US ordered China to close its consulate in Houston. The action was described as a “political provocation” by China’s Foreign Ministry.

The market reacted defensively to the news while the rising tensions between the two nations added further risks to the valuations of multinational corporations already strained by the severe impacts of the coronavirus pandemic.

The US S&P 500 has risen 2.23% over the past week, as investor sentiment rose in anticipation to positive corporate results from the largest companies.

Leeds-founded retailer Marks & Spencer announced 950 jobs are at risk as the firm needs to become stronger and leaner following the impacts of the pandemic.

Although M&S’s food stores remained open throughout the lockdown, trading in other sectors of the business were significantly affected, such as a year-on-year 84% fall in clothing sales.

The retailer already faced challenges in adapting to online shopping with intense competition coming from the likes of Boohoo and Asos. The company’s shares dropped 1.98% in the last week.

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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