What Does The AstraZeneca News Mean For Markets Today?

Okay, very good morning to you. Hope you're doing well. It is Wednesday the 9th of September. Just before I begin, don't forget to subscribe to the YouTube channel. We've had lots of content coming in the last few days. I did a breaking news one at around midnight London time last night. Eddie's done some videos about SoftBank and Tesla as well as our regular daily updates. So hopefully you're finding all of this additional content useful. But gonna start off then, a quick recap of how we finished yesterday. And of course it was another deep down day in the red, and this followed then the Labor Day holiday, the extended weekend in the US. So the first time that which they'd come back into the market, and this is one of the things I was kind of inferring back on Monday when we did the first kind of look ahead for the week, was that I wouldn't get too concerned about how we're going to perform ex the US not being in, and I'd rather not commit to say this is the bottom of the recent routs, or we're going to extend and correct lower until we see the US coming yesterday. And, and yesterday we definitely saw that continuation of the spillover in markets we've had initiated from really Thursday from last week. So again, the mega-cap tech names were down— Microsoft, Apple, Google, Amazon— ranging from around 3.5% to, in Apple's case, 7%. Now, what does that look like from a percentage point of view? Well, actually, from a technical definition, we are in a correction as far as the NASDAQ is concerned because we've obviously lost more than 10% since the initial highs that were seen just a few days ago. Um, yesterday the NASDAQ underperformed. So just as what we were seeing on the way up, NASDAQ outperforming, the flip reversed. The NASDAQ down over 5% yesterday, the S&P comparatively down just around 3%. One of the other things that people were asking about, and Eddie put out an excellent video on the YouTube channel, so just go back onto his, uh, distinct section on our channel and you'll be able to find that video of why their shares fell around 20% yesterday in New York trading. That was the most ever single day decline for their shares, and it was on news of a partnership between competitors Nikola Corp and General Motors. But more from Eddie in that video. I strongly suggest you check that out if you're interested in Tesla stock. Otherwise, elsewhere then, following on from generally that, that negative close on Wall Street, there was actually more negative news after market. And I just so happened to be at my desk at the time, I was just doing a few emails and stuff, and then I saw the news break about AstraZeneca. And it did create then— that information came while electronic trade was closed, but the reopening At 11 PM saw a gap down, you can see here in the S&P 500, similar in the NASDAQ. And then we saw T-notes gap up, and the dollar actually strengthened at the time when the news came out, and it just pushed down cable to those fresh lows that were seen in the overnight session, which was around 1.2950 in the futures at least. So at the moment, overall general sentiment still fairly fragile, I would say, but stock index futures have recovered after that initial knee-jerk response to the AstraZeneca Seneca news overnight, which I'm going to recap here, give you an overview in a second. The dollar's pretty steady, the Dixie's flat, but again, it does feel like the market's on tenterhooks at the moment, waiting for the next kind of event to unfold. And there's been quite a string of some negative things that have occurred obviously as of late. But in the FX markets, that means then that most currency pairs, major in the euro dollar and cable, are down around 20 pips each, 25 respectively. Uh, in cable, uh, we can talk about a little bit more detail in a moment, but obviously since Boris Johnson's threat to kind of walk away and leave the EU, strong-arming some of these talks going into the 8th round of negotiations that continue today. And we've also got the market bill coming out from the UK government, which is capturing a lot of UK headlines this morning, and all of that going to put further pressure whether it's a bluff or not on the success of this deal. And undoubtedly people need to start pricing in the potential risks of a no deal. And the pound having fallen now the best part of around 2.5 points only literally this week, but a complete reversal off from the near test of 1.35 that we were seeing. And if you think about it, that was only 8 days ago. So as we continue to see a little bit of downside pressure Uh, we're at quite an interesting technical point, um, as of this morning in cable, which would be around here, that previous resistance and support area that we saw back in toward the latter part of July. Any breakdown of there, then key areas would be this 10th of June high. That was also an area of resistance before the break high on the 24th. And you've got the 200 DMA residing just below there with the 128 handle. So a couple things to keep an eye on there. And certainly we'll talk about the UK because There's been a meaningful government, um, change as well in rhetoric in regard to the amount of people that can gather, falling from 30 down to 6 in certain situations, which I'll discuss in a moment. So that's the overall general sentiment. Crude oil as well, still a little heavy, uh, continuation of the decline that we've seen of late, uh, with some apprehension both on the demand and the supply side. So again, I've got a couple of headlines I can discuss on that as well. So let's talk about AstraZeneca first. What exactly was this news from, from overnight? And what's happened here is AstraZeneca's COVID-19 vaccine study put on hold due to suspect adverse reaction in a participant based in the UK. The nature of the adverse reaction and when it happened were not immediately known, although the participant is expected to recover. The main parts of the article and this event that you need to be aware of are that the spokesperson describes the pause as a routine action which has happened whenever there's a potential unexplained illness in one of the trials. So, um, one of the main things here, and perhaps one of the reasons why the market did recover overnight, is that this is usual protocol as going through a clinical trial process, that if there is something like this that happens Well, then the strategic kind of move is to put everything on hold in order to not jeopardize the entire study, uh, in its entirety. Also as well, other companies will have to halt their, um, their current trial basis in order to then for them to see what exactly the deal was with this one-time adverse reaction to then continue on as they were. So there's been a quite a negative reaction in markets initially overnight. It did look pretty heavy. One thing I would say is that as far as the S&P is concerned, there was a— I think it was the 21 DMA I was watching last night as the market came under some pressure. You can see this gap down, but you know, we filled the gap and we're trading pretty flat to where we were at the close yesterday. So still holding on to some of those losses, but on the daily continuation, if I just move my, my camera for a moment, you can see here I've marked up— it's the usual chart that we're used to seeing. But you had the— excuse me, not the 21, the 50 DMA, which is the red line— briefly flirted with that at the initial pressure that was seen at reopening of electronic trade on Globex. But we bounced off there, and I do think that that's quite a key area that I would be watching here in the S&P, which is around that 50 DMA and that previous high that we had on the 23rd of July before the renewed China tensions started picking up. That line comes in really around 3,300. 3,284 would be the, the peak on the, on the 24th. So around that kind of area I think is quite key. But the 50 DMA holding for the time being, seeing quite a nice bounce off around that area. On the upside, any recovery here though, be looking out for a bit of resistance at around 5,557, which was that previous volatility low that we had back at the end of last week, but also was an area of support to price during the, the kind of second and third week of August before the eventual push-up to all-time highs. And then we saw this rotation out of some of the tech names. So yeah, quite key, key bar here on the low, on the downside between the 50 DMA, and then also on the upside now that previous support turned resistance, either around 55, 57 in the spoons. A few other details then about this Astra story, then, just to go over and give you a bit more context and how I would look at this. Um, there are currently 9 vaccine candidates in phase 3 trials. AstraZeneca is the first phase 3 COVID-19 vaccine trial known to be put on hold at the moment, but I don't think, as I just described, it'd be too unusual to see the others taking a momentary hiatus just until we get some sort of definitive conclusion what exactly was the reasoning and the details behind why Astra has got to this point and putting their study on hold. Astra only began its phase 3 trial in the US in late August. One thing to be aware of is I did tweet yesterday, this was quite a good and detailed kind of release from Stat News who was the website that broke this exclusive article last night. They've been particularly timely with their information, but they actually have a section if you just navigate around their site where you can look at all of the different, basically every single treatment and vaccine with direct links to the studies, the details with notes and updates which tell you by date what exactly is happening. So here you can see University of Oxford and AstraZeneca is the one we were discussing last night. Moderna Therapeutics and BioNTech and Pfizer are the 3 big ones that people are tracking, and this is a good way of keeping on top of those. In terms of actual reaction, um, one of the things is that I was looking at the AstraZeneca ADRs, so the kind of after-hours, uh, US kind of traded shares of Astra, and they were down around 8.1% when they closed. So indications are for the open on the FTSE, it could be quite messy for Astra at the open. Losses to the tune of 8 to 9% are expected for this morning. And, you know, AstraZeneca is a particularly large component of the FTSE 100, so definitely be keeping an eye on that. Those related companies in the pharma space— well, actually, Moderna shares were up about 4.25%, and BioNTech ADRs were up around 3%. So such is life in the way that shares respond The, the other companies take benefit from the, from the fact that AstraZeneca have had, have hit a bit of a speed bump here in these latest phase 3 trials. Another thing, a comment that I saw overnight was from Anthony Fauci, who's that ex-medical expert in the US, and he said that Moderna and Pfizer-BioNTech COVID vaccine trials are expected to be enrolled by the end of September and allow another 1 to 1.5 months for a second dose, while added it is unlikely that they'll have any form of definitive answer by November 3rd. Now, Fauci's been a bit of a pain for Trump. Remember, Trump on Labor Day was giving his speech quite anti-China, and he was also talking about the fact that they'll have a vaccine by October. And Fauci's coming out now saying that they won't have a definitive answer by November 3rd. Which is obviously the election. That's not unusual. Fauci's been much more, I'd say, realistic. And we know that Trump generally is politically just posturing in terms of making these kind of quite brash promises without any really scientific proof. And that would be particularly fast to get it through by the timelines that he's suggesting. But one of the main things here is that a setback like this, you know, what's quite intrinsic for the success of Donald Trump coming into this election is that he would want a vaccine coming fast. That's just going to help then offset any negativity that might have built up around his handling of the COVID situation, obviously in the US being one of the hardest hit. So as much as he can frame kind of China as the main narrative and law and order with some of the social unrest in America, he definitely needs a vaccine as well. And this AstraZeneca news, be interested to see what he has to say about this when he gets up and starts tweeting later on today. A few other things I wanted to mention, and that was there was some other news that broke last night at pretty much 10 minutes around the same time that the information about AstraZeneca broke, and that was about the number of infections per day in the UK. And that explains why the government has come out and made their latest move last night. Now, the number of infections of confirmed coronavirus cases in the UK has shot up quite sharply since the weekend. We've been tracking new cases of around 3,000 per day, and we were down at the beginning of August, it was sub-1,000. So it's tripled basically, uh, since where we were. We were, we were sub-1,000 for the best period of about 1.5 months. So this is quite a breakout and puts confirmed case levels at levels we have not really seen since some of the peak numbers going back to May or even April. And if you remember, in the UK, April was when we were in the most severe period of the national lockdown. This, of course, all comes as the economy starts to attempt to reopen. I was actually off the desk yesterday afternoon and I, and I had some time and I managed to have a little walk around Borough Market in central London. And it was by by far the busiest I've seen it since going all the way back to lockdown happening in March. It was almost felt like normal service had resumed apart from tourists. Certainly all the restaurants are full, you know, bars were busy, so on and so forth. So quite interested to see now, and particularly with the test of time, people's tolerance and patience for adhering to a lot of these rules like social distancing and whether that can be maintained. Is going to be key. And of course, we're coming into a very important seasonal period of the year when naturally with the cold weather that forces people indoors, and that can heighten the increased transmission of the virus. And this all coming with the government looking to push people back into work to get the economy going, kids back to school. So all of these things could be the perfect cocktail to seeing this number escalate quite quickly. And hence the reason why I feel then that the government has had no other choice but to start making some of these changes that they've announced last night, because for them the worst case would be the localized lockdowns turn into national lockdowns, and that economically would be incredibly damaging for the prospects of the shape and speed of the UK recovery. Um, one of the things that people have looked at with this is that one concern for ministers is the rules are being flouted in particular by young people who may not be the greatest risks or at risk of contracting the virus or indeed dying from it in, in regards to what we've seen from the data. But it's more questioned about who do they pass the coronavirus on to and their potential more vulnerable relations, i.e., older demographic. So one of the things here, confirmed cases in England now among younger people, the dark blue bar would be indicative of previous weeks. The light pale blue bar is the latest week. As you can see here, we've had a really high pop between the ages of 10 to 20 and 20 to 30, whereas it's quite the flip side on the older demographic, going all the way from 60 up to 80 plus, is the exact opposite. So what has this led to? Well, Boris Johnson came out last night then, and again, it is a bit of a U-turn. As I said, the government, Dominic Raab, for one, was very forceful over weekend and Sunday media in the UK in order to try to push people back into work as a key component in getting the economy firing again. But this does cause more complications then, because this would somewhat be the opposite of that. And what's happened is that all social gatherings now of more than 6 people will be banned in England under new limits to be announced by UK Prime Minister Boris Johnson on Wednesday as coronavirus cases grow. Also, the front page of kind of the Telegraph this morning, they were talking about that some of the quite stringent lockdowns that have been happening in areas— I think it was like Bolton and also Blackburn, these areas in the north in the UK at the moment who've seen quite extreme community-type outbreaks which are more persistent consistent and long-lasting in terms of how many people they're affecting. They're implementing curfews, meaning again, like we've seen in Australia with the outbreak in Melbourne, which got particularly out of control, that they too adopted a curfew where people were not allowed to basically leave and be out active in the nighttime between the periods of generally 10 PM and 5 AM. But interested to see that that's been talked about as potentially being adopted on a nationwide level should this situation continue to get out of control. So yeah, some interesting stuff happening here. All of this obviously is going to test the political favorability of the government. Um, yes, you could argue that they've got to take decisive action in order to control what is likely to be a very challenging time to suppress the further increase of these cases going into the winter period. However, it does fly somewhat in contrast from some of the recent government communication, and this all coming in the backdrop, of course, of ongoing Brexit talks. And on that front, Wednesday is one of the busiest days for this. I mean, this is looking at the agenda. They're talking about all the major things again: level playing field, horizontal arrangements, governance, fisheries, trading goods, so on and so forth. One of the main things we've had come out this morning This morning though is this, which is the UK government admits it will break international law over Brexit treaty. What this is talking about then is it quoted, um, basically Jonathan Jones, the head of the government's legal department, has quit the process that plans to withdraw the Brexit withdrawal agreement. Brandon Lewis has said that, uh, that this does break international law in a specific and limited way of plans to override the Brexit withdrawal agreement. It's a little bit technical in terms of its legality, but basically the government's kind of disagreeing what the government agreed, which then got it elected, uh, back in the election. So it's a little bit, again, um, interesting to see how this is going to play out. Essentially what it would appear to be on the surface is that the UK government's trying to play a game of kind of brinksmanship to try and force Europe to the table, talking about them, um, trying to talk about, look, we're going to release our internal market bill today about how all of the countries within United Kingdom are going to operate with each other. We'll start accelerating our preparation of what life looks like outside of, um, then the EU beyond the transition period at the end of the year, with particular then emphasis on the Northern Ireland situation, which remains as it always has been a real sticking point and contentious issue. And this would be one of the main critical points of this matter. Senior UK Sky News sources believe the UK chief negotiator Frost will conclude that the deal with the EU is not achievable without fundamentally compromising the UK red line. So at this point I don't want to dramatize this too much because all the way from the beginning of the week, we did not anticipate that there would be any type of real movement on either side at the conclusion of the 8th round of negotiations this week. And it's looking very much to be the case. But look, just, just jumping back onto the pound, this is one of the main things that I'm anticipating. Fundamentally, at the moment, you've got a risk-off atmosphere. That's helping support the greenback. The dollar index continues to bounce from its very depressed levels we've had over recent weeks. The Dixie starting to liven up now again. It took a bit of a pop on the astral news last night, some of the negative end of Wall Street yesterday. Now we've got this latest fundamental, a renewed risk for the pound. Not only is the Brexit side getting more more evidently clear that they continue to remain very far apart, and UK government's being very stern with their stance. But now there's risks of a, a new kind of outbreak in coronavirus, and that's going to impede then the government's ability to reopen the economy as per perhaps previously envisaged. And that's only going to have negative economic consequence. So here you can see cable just getting a little extension here, 20-pip pop or so on the break of the overnight low. That was the Astra low and the range low of Asia just giving way with some of this Dixie strength. So yeah, if we break around these key levels, it does open up the potential for a bit of a deeper run here, uh, in sterling. So 100, 100% fundamentally, just given the setup, worth keeping an eye on for some potential more downside pressure as we go through the day. Um, oil's the final thing I wanted to mention. It trades well below 40 AUDUSD now trading a 36 handle. We've, we've had a level just being marked out as quite key support here in the near term that's definitely worth keeping on. 3613 in the futures, this would be the afternoon low from yesterday. This would be the post-Astra low. It also got a bit of a hit, just general risk-off that was observed when that news article hit. And so definitely worth keeping an eye there as we push through the session. Generally what people are talking about in the oil market is crude continues to be hurt in a combination of supply and demand dynamics. And we've had a little bit of renewed tension of US-China relations after what had been a fairly quiet previous week. We've had a further ongoing retreat in stocks which is just denting a little bit of general risk appetite and sentiment. And then also we've had this latest news about the COVID-19 vaccine seen being potentially delayed, which again is going to impede perhaps where expectations were in regards to how quickly the recovery could take, take place globally, and therefore the type of look of what demand looks like in the future. The coronavirus pandemic is still raging, and Bank of America Merrill Lynch analysts have said that it will take 3 years for oil demand to fully recover from the outbreak, even if there is a vaccine. The other thing that this Bloomberg article is mentioning that's worth noting is that market structures point to more downside risks for oil prices. Contangos, where near-term prices are cheaper than longer-dated contracts, are widening for both global and US benchmarks, pointing to increasing concern of oversupply. Abu Dhabi as well has followed suit of Saudi Arabia, and they've cut their official crude pricing for October. And all of these things as well have acted as quite bearish signals so far this week for oil prices, uh, as well. So yeah, keeping an eye on that price point on that product, as I mentioned, around $36.13 in the futures. As far as the day is concerned on the calendar, it is relatively quiet. Let me just quickly jump back on the headlines and give you the latest with the Chinese inflation data. The CPI year-on-year was in line, 2.4%. The PPI -2% in line as well. So no great movements on the back of that. People looking more on a lot of these headline stories I've been talking about. So no reaction to the Chinese data, both in line in terms of those inflation metrics. For the European morning, it is very quiet, and typically what you tend to see then is people get drawn to some of these major headlines in play, perhaps then reacting to them more so than they normally would because of the fact that it calendar is particularly light, so do bear that in mind. Uh, Astra at the open is going to be quite a key one to watch. And again, as I said, pre-market indications, it could be indicative then that they could open down as much as 8 to 9%. Otherwise, in the afternoon, no major 1:30s out of the US. The Bank of Canada rate decision, they're expected to keep rates on hold. And then as far as fixed income is concerned, you've got $35 billion in a 10-year note auction coming later as well. All right, that is it. I can let you guys get on with your day. So thanks as ever for listening. Uh, please do remember to subscribe to the channel if you're new to Amplified Trading, and feel free to drop me any questions in the comments section. Always happy to help. Okay guys, have a great day ahead.