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Research Market strategy
by Swissquote Analysts
Morning News

AstraZeneca Gets $1.2 Billion From the U.S. to Develop Its Covid-19 Vaccine

Topic of the day

AstraZeneca's Covid-19 vaccine secured a huge funding commitment from the U.S. government, though the earliest doses appear to be committed to the U.K. The company says the program won't affect its earnings this year, as it has committed to taking no profit. Still, the stock jumped 3.7% in premarket trading, again demonstrating investor's buy first, ask question later approach to the Covid-19 vaccine race. S&P 500 futures were down 0.2%. AstraZeneca (ticker: AZN) said Thursday the U.S. government's Biomedical Advanced Research and Development Authority had committed up to $1.2 billion to support the development of the Covid-19 vaccine the company is developing in partnership with the University of Oxford. AstraZeneca (ticker: AZN) has arranged for enough capacity to supply one billion doses of the vaccine in 2020 and 2021. Data isn't yet available on the first human trial of the vaccine being conducted. In a separate statement, the U.S. Department of Health and Human Services said AstraZeneca had agreed to make 300 million doses available to the U.S. by January, with the first doses ready as early as October. AstraZeneca said it has another arrangement with the U.K. government, under which the company will supply vaccine doses "starting in September, " a month earlier than the U.S. target. It didn't say how many doses it had committed to the U.K., but did say it had agreements to supply "at least 400 million doses" in total.

Swiss stocks

The SMI closed 0.3 percent firmer on 9,791 points Wednesday, with even a strong opening on Wall Street unable to push the index higher. Traders said Thursday’s Swiss public holiday could see many market participants take Friday off for a long weekend. Nestle pulled down the market, falling 0.5 percent. Zurich Insurance slid 1.2 percent. Swiss Re lagged the market, rising only 0.1 percent. Cyclicals ABB rose 0.7 percent, Adecco 0.5 percent and Geberit 1.4 percent. Sika rose 2.2 percent. In the US, the excitement waned about promising initial results of Moderna’s coronavirus vaccine after a media report criticised the data as insufficient. While Moderna’s stock fell Tuesday and barely recovered Wednesday, Lonza, which is set to produce the vaccine in the US for Moderna, rose 2.7 percent. Julius Baer closed unchanged because of a CHF 0.75 ex-dividend markdown, but was actually buoyed by Tuesday’s good financials. Sonova also benefited from its previous day’s figures, gaining 1.9 percent.

International markets

Europe

European stocks fell as investors reacted to renewed U.S.-China tensions and shrugged off improved economic data. The Stoxx Europe 600 declined 0.8%, the FTSE 100 dropped 0.9%, the DAX slid 1.4% and the CAC-40 shed 1.2%. "The market's main preoccupation Thursday seems to be Donald Trump's latest attacks on China, the president not letting up as he tries to win voters over by pinning the blame for the pandemic's impact in the U.S. on Beijing, rather than his own failings," Spreadex analyst Connor Campbell said. Investors "didn't pay much attention" to May's purchasing managers' index surveys for the eurozone, U.K. and the U.S. that showed manufacturing and services activity picked up but remained in contraction, he said. Deutsche Lufthansa AG (+2,7%) confirmed Thursday that it is in advanced talks with the German economic stabilization fund for up to 9 billion euros ($9.84 billion) in state aid as it tries to shore up its finances amid the coronavirus, an agreement that could see the state take a 20% stake in the airline. Lufthansa trades 6.8% higher at EUR8.46 after unveiling the details of the financial package. The deal would include a loan of EUR3 billion from the KfW--a German state-owned bank--and a stake purchase by the economic stabilization fund, known as the WSF, the carrier said.

United States

U.S. stocks gave up some momentum intraday after data showed another wave of Americans applied for unemployment benefits the prior week. The Dow Jones Industrial Average fell 98 points, or 0.4%, to 24478. The S&P 500 lost 0.7% and the Nasdaq Composite fell 0.7%. The Labor Department said that about 2.4 million Americans filed for unemployment benefits in the week ending May 16, extending a swift and severe deterioration in the labor market. More than 38 million Americans have filed applications since mid-March. Despite a grim economic outlook, stocks are on pace for big weekly gains, with investors citing optimism that coronavirus vaccines might be available later this year. Starbucks Corp. (+0,4%) said it is speeding up plans to build stores with drive-throughs and will close locations in unpopulated malls as its dine-in service remains suspended due to the coronavirus pandemic. The Seattle-based coffee company said Thursday that U.S. same-store sales are now down 35 to 40% from last year, after it closed dine-in operations starting in March. Sales in its key China market, where Starbucks had closed more than half of its stores from January, remain 20% lower than the same period last year.

Asia

Asian benchmarks closed lower, as elevated tensions between Washington and Beijing continue to worry investors. The week has been fraught with worries about U.S.-China relations which have deteriorated in recent weeks as the Trump administration blames Beijing for mishandling the COVID-19 pandemic that was first identified in Wuhan back in December. Chinese Premier Li Keqiang said Friday the government wouldn't set an economic target for 2020, in a stark acknowledgment of the challenges facing the world's second-largest economy as it continues to grapple with the uncertainties around the coronavirus pandemic. Hong Kong shares were lower in morning trade, with the Hang Seng Index down 2.7% at 23615.50 following news of U.S. senators' plans to propose a bill to sanction China over proposed new Hong Kong security laws.

Bonds

Prices for the revamped 20-year US-Treasury bond climbed in its debut session. The yield on the Treasury Department's newest security recently traded at 1.158%, according to Tradeweb, a day after the Treasury Department sold the bond at a yield of 1.22%. Bond yields fall when prices rise. The 20-year yield's fall exceeded that of the yield on the benchmark 10-year note, which slipped to a recent 0.667%, compared with 0.679% on Wednesday.

Analysis

Dt. Bank lowers the Jenoptik target to 22 (28) EUR – Hold
CS lowers the Richemont target to 48 (52) CHF – Underperf.
Dt. Bank lowers Amadeus to Hold (Buy) – Target 45 (80) EUR

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