Company / Analytics

Analytics, 04 May 2020

Week 18 in Brief

The US Food and Drug Administration (FDA) has authorized emergency use of the Ebola drug remdesivir for treating the coronavirus. The authorization means the antiviral drug can now be used on people who are hospitalized with severe Covid-19, bringing hopes that progress is being made in finding a cure for the virus. However, experts have warned the drug should not be seen as a “magic bullet” for coronavirus. Shares of Gilead Sciences, the biotechnology company behind the drug moved 1.9% higher in after-hours trading Friday immediately after the announcement. Year-to-date, the company’s stock has gained 23%, hitting a low of $62.23 on Jan. 21 before soaring to $85.97 high for the year on March 19. It closed Friday at $79.95. This analyst thinks that Gilead stock may not be a buy just yet.

Meanwhile, the Serum Institute of India (SII), the world’s largest maker of vaccines by volume, is mass-producing (up to 60 million doses this year) of a potential vaccine candidate developed by the University of Oxford and which began human testing last week. The firm decided to start manufacturing the vaccine after it showed success in animal trials and had progressed to tests on humans.

Stocks closed sharply lower Friday in an ugly start to May. Investors showed disappointment with earnings of tech companies and with President Donald Trump’s threat to impose import tariffs on China in retaliation for its handling of the COVID-19 pandemic. After gains Monday through Wednesday that helped the major indexes post their best April in years, losing sessions Thursday and Friday left the benchmarks with losses on the week, with the Dow Jones Industrial Average lost 0.2% (closing at 23,723.69), the S&P 500 also lost 0.2% (closing at 2,830.71) while the Nasdaq Composite Index lost 0.3% to end the week at 8,604.95 points.

European markets finished sharply lower on Thursday with shares in London leading the region. The FTSE 100 is down 2.34% while Germany’s DAX is off 2.22% and France’s CAC 40 is lower by 2.12%. Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.33% and the Hang Seng rose 0.28%. The Nikkei 225 lost 2.84%, CNN Business reported.

The major tech companies – Apple, Amazon, Google, Facebook, and Microsoft released their Q1 2020 (January – March) earnings this week. Earning results of Facebook, Microsoft, and Alphabet were upbeat while analysts were disappointed in Amazon’s profits and its announcement that it would spend all of its second-quarter earnings on measures to combat the coronavirus. While Apple’s results were above analyst estimates, the company’s decision to withhold profit guidance for the first time in a decade rattled investors. Here is a brief look into the reports.

Warren Buffett’s Berkshire Hathaway sold its entire stakes in Delta Air Lines, Southwest Airlines, American Airlines Group, and United Airlines Holdings. Airline stocks have been hard hit by the COVID-19 pandemic, with travel demand all but evaporating. Most airline stocks have lost half of their value or more this year as a result, with the industry now focused more on survival than earnings growth. The announcement is sure to put further pressure on airline shares, as investors have made a lot of money over the years doing as Buffett does. Instead, Warren Buffett is hoarding cash and had a record high of $137 billion at the end of Q1 from $128 billion at the end of Q4. But is the Oracle of Omaha right this time around?

There is a looming drop in home prices. People are more pessimistic about the housing market due to the coronavirus pandemic and its economic fallout. Only 50% of Americans said that now is a good time to buy a home, according to a survey of roughly 1,000 people released Friday by polling firm Gallup. That represents the lowest share of Americans to have a positive view on the country’s housing market in the time that Gallup has tracked people’s sentiments on real estate, said Jacob Passy at MarketWatch.

Israel’s largest bank, Bank Hapoalim pleaded guilty to helping US customers evade taxes by transferring money to offshore accounts, as well as for laundering money as part of a bribery operation related to international soccer association, FIFA. According to the Washington Post, the bank has agreed to pay $900 million for the combined crimes. As part of a crackdown on off-shore tax evasion by the US Department of Justice, American prosecutors found that the bank helped to evade taxes on more than $7.6 billion worth of deposits.

On the commodities front, Oil has seen a broad recovery since plunging to negative prices on April 20, though producers’ earnings reports have detailed the lasting effects of the oil-market turbulence. Exxon Mobil on Friday posted its first quarterly loss in 32 years, saying that “unprecedented pressure” from the coronavirus pandemic tore into margins.

West Texas Intermediate crude oil continued a three-day rally, climbing as much as 8.7%, to $20.48 per barrel. The commodity settled roughly 5% higher, at $19.75 per barrel. On the other hand, Brent crude, oil’s international standard, traded 10% higher at intraday highs, at $27.88 per barrel.

Nearly half of all US states forged ahead with easing restrictions on restaurants, retail, and other businesses in hopes of reviving business amid the coronavirus pandemic. There has been an enormous pressure on states to reopen as the economic pain resulting from COVID-19 has grown to historic proportions, and agitations to relax stay-at-home orders increased. Weeks after insisting he had “total” authority to decide when and how to reopen the nation’s economy, President Donald Trump has largely left it to each governor to decide on a state-by-state basis, after the two-week economic reopening guidance released by the White House in mid-April expired on April 30. Meanwhile, New York became the first state to cancel its presidential primary amid the pandemic.

Countries across the world also eased their restrictions, especially in European states including Germany, Spain, Austria, Switzerland, Italy, Denmark, Finland among others. Others including South Africa and India. Meanwhile, New Zealand has ‘effectively eliminated’ coronavirus, as newly diagnosed infections have been in the single digits.

Sexual allegations against the Democratic presidential nominee Joe Biden dominated the week after new evidence surfaced to corroborate claims that Biden sexually assaulted her staffer in the 1990s. Tara Reade, a former staffer who worked in Joe Biden’s Senate Office, has accused the Democratic presidential nominee of sexually assaulting her in 1993. For the first time since he became a presidential candidate, Biden addressed the allegations even as the party is being criticized for hypocrisy over public support for the #MeToo movement. Will the Democrats stick with Biden?

This week?

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