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26/11/21 Briefing

Updated: Nov 29, 2021

The S&P 500 futures are dropping 69 points, or 1.5%, below fair value after scientists discovered cases of a new strain of COVID-19 in South Africa, fueling concerns about tighter economic restrictions and its effect on the global recovery effort.

The situation is in its very early days, meaning there's a lot of uncertainty surrounding the variant and its response to vaccines. The World Health Organization will hold an emergency meeting today to discuss the variant, which will likely be called "Nu."

In the meantime, growth concerns are permeating the market in a knee-jerk reaction: travel stocks are noticeably weak in pre-market action; WTI crude futures have dropped 6.5%, or $5.12, to $73.26/bbl; the 10-yr yield has dropped 12 basis points to 1.53%; and gold futures have risen 1.4% to $1808.40/ozt.

The 2-yr yield is down ten basis points to 0.54%, signaling expectations for the Fed to reconsider thinking about speeding up its taper plan. The U.S. Dollar Index is down 0.6% to 96.23.

In related news, a BioNTech (BNTX 326.74, +21.98, +7.2%) spokesperson said data on the new COVID-19 variant will be out in two weeks, and it will then determine if a vaccine adjustment is needed. A study showed Merck's (MRK 80.40, -1.88, -2.3%) COVID-19 treatment pill was less effective than previously thought.

Separately, retail commentary will likely be in the news for Black Friday shopping, but the COVID variant situation has already overshadowed any upbeat observations.

In U.S. Corporate news:

  • Pfizer (PFE 53.78, +2.89): +5.7% on the prospect for increased vaccine demand with the new coronavirus variant. BioNTech (BNTX 326.74, +21.98, +7.2%), which co-developed a COVID-19 vaccine with Pfizer, said vaccine data on the new variant will be out in two weeks.

  • Merck (MRK 80.40, -1.88): -2.3% after a late-stage study showed its COVID-19 treatment pill only reduced hospitalization and death by 30%, which was less than the 48% initially thought.

  • Macy's (M 30.57, -1.57): -4.9% amid growth concerns attributed to the new COVID-19 variant, overshadowing a word from its CEO that Black Friday is off to a strong start.

  • Uber (UBER 40.03, -2.05): -4.9% amid news that it will close most service in Belgium following a court ruling.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the week on a lower note amid concerns about reports of a new coronavirus variant. Japan's Nikkei: -2.5% (-3.3% for the week) Hong Kong's Hang Seng: -2.7% (-3.9% for the week) China's Shanghai Composite: -0.6% (+0.1% for the week) India's Sensex: -2.9% (-4.2% for the week) South Korea's Kospi: -1.5% (-1.2% for the week) Australia's ASX All Ordinaries: -1.8% (-1.7% for the week).

  • In economic data:

  • Japan's November Tokyo CPI 0.5% yr/yr (last 0.1%) and Tokyo Core CPI 0.3% yr/yr (expected 0.4%; last 0.1%)

  • Australia's October Retail Sales 4.9% m/m (expected 2.5%; last 1.3%)

  • Singapore's October Industrial Production 2.4% m/m (expected -0.5%; last -1.9%); 16.9% yr/yr (expected 14.5%; last -2.2%)


  • In news:

  • Japan's Prime Minister Kishida will seek a 3.0% wage increase during Spring wage talks.

  • Moody's affirmed Japan's A1 rating with a Stable outlook. Japan's parliament will convene for an extra session on December 6.

  • The Bank of Korea raised its bank rate 25 bps to 1.00% on Thursday.



  • Major European indices trade on a sharply lower note amid concerns about reports of a new coronavirus variant. STOXX Europe 600: -2.4% (-3.2% week-to-date) Germany's DAX: -2.6% (-4.1% week-to-date) U.K.'s FTSE 100: -2.6% (-3.4% week-to-date) France's CAC 40: -3.3% (-3.8% week-to-date) Italy's FTSE MIB: -2.9% (-3.8% week-to-date) Spain's IBEX 35: -3.6% (-2.6% week-to-date).

  • In economic data:

  • Eurozone's October Private Sector Loans 4.1% yr/yr (expected 4.0%; last 4.1%) and Loans to nonfinancial corporations 2.5% yr/yr (last 2.1%)

  • Germany's October Import Price Index 3.8% m/m (expected 2.0%; last 1.3%); 21.7% yr/yr (expected 19.6%; last 17.7%)

  • France's November Consumer Confidence 99 (expected 98; last 99)

  • Italy's November Business Confidence 116.0 (expected 114.0; last 115.1) and Consumer Confidence 117.5 (expected 117.0; last 118.4)

  • Swiss Q3 GDP 1.7% qtr/qtr (expected 1.6%; last 1.8%); 4.1% yr/yr (expected 3.2%; last 8.6%). Q3 Employment Level 5.213 mln (last 5.126 mln)


  • In news:

  • Bank of England Governor Bailey repeated that supply chain issues were responsible for higher inflation.

  • An official from Germany's Greens party said that the new coalition is not ruling out another lockdown.

  • The French fishermen union will reportedly block the Channel tunnel and ports to protest the lack of new licenses from the U.K.



U.S. equity futures:

  • S&P 500 Futures: -83 @ 4,626

  • DJIA Futures: -792 @ 35,044

  • Nasdaq 100 Futures: -198 @ 16,210

Overseas:

  • Europe: DAX -2.6%, FTSE -2.6%, CAC -3.3%

  • Asia: Nikkei -2.5%, Hang Seng -2.7%, Hang Seng -0.6%

Commodities:

  • Crude Oil -4.28 @ 74.11

  • Nat Gas +0.238 @ 5.306

  • Gold +24.55 @ 1808.85

  • Silver +0.152 @ 23.648

  • Copper -0.1132 @ 4.3243

U.S. Summary:

  • Earnings/Guidance (Full Earnings Calendar):

  • Aura Biosciences (AURA) reports Q3 results; also reports that data from two clinical trials were recently presented at American Academy of Ophthalmology 2021 Annual Meeting


  • General News:

  • Scientists discovered 22 cases of a new coronavirus variant in South Africa with a "very unusual constellation of mutations". The World Health Organization will meet today to discuss it because it is unknown how effective vaccines will be against the variant, according to the New York Times

  • EU and UK will halt air travel from countries in Southern Africa amid variant concerns, according to Bloomberg

  • Thanksgiving air travel was close to 2019 levels, according to the New York Times

  • Senator Joe Manchin (D-WV) wants President Biden to restore the Keystone XL pipeline, according to The Hill

  • Antitrust technology bills in Senate are getting bipartisan momentum, according to the Wall Street Journal

  • Bitcoin enters bear market on fears of new coronavirus variant

  • Utilities in Southern California are considering cutting power due to fire risks, according to The Hill

  • Alphabet (GOOG): UK CMA published a notice of intention to accept the modified commitments offered by Google, and has invited representations from interested third parties on the modified commitments

  • Berry Global (BERY) announces $50 mln accelerated share repurchase transaction

  • BioNTech (BNTX) spokesperson says data on new COVID-19 variant will be out in two weeksand it will then determine if a vaccine adjustment is needed

  • Boeing (BA) will build six more MH-47G Block II Chinooks for the U.S. Army Special Operations Aviation Command as part of a $246.48 million contract

  • Boeing's (BA) Canada fighter jet order did not meet required standards, according to Reuters

  • Cardiovascular Systems (CSII) initiates voluntary recall of WIRION Embolic Protection Systems

  • Citigroup (C) will reorganize functions of Institutional Clients Group unit, according to Reuters

  • Didi (DIDI): China wants Didi to remove listing in US due to security issues, according to Bloomberg

  • Equinor (EQNR): Investing NOK 10 billion in further developing the Oseberg field

  • Golden Star Resources (GSS) announces receipt of interim court order

  • Hudbay Minerals (HBM) announce the appointment of Andre Lauzon as its Senior Vice President and Chief Operating Officer, effective January 4, 2022

  • Lithium Americas (LAC) increases strategic interest in arena minerals

  • Merck (MRK) and Ridgeback Biotherapeutics provide update on results from MOVe-OUT study of molnupiravir, an investigational oral antiviral medicine, in at risk adults with mild-to-moderate COVID-19

  • Merck (MRK): Study shows COVID-19 treatment pill reduces hospitalization by 30%, which is a lower efficacy than first thought

  • Micron (MU) and UMC (UMC) announce global settlement

  • Mizuho (MFG): Japan aiming to take corrective action against Mizuho, according to Reuters

  • Moderna (MRNA) vaccine was more effective than Pfizer (PFE) in a new study, according to Bloomberg

  • Novo Nordisk A/S (NVO) announced that Health Canada has approved Wegovy, the first-and-only prescription weight-loss medication with once-weekly dosing

  • Novo Nordisk A/S (NVO) announces impact from Volume Based Procurement for insulin in China

  • Ocugen (OCGN) announces that the U.S. Food and Drug Administration has issued a clinical hold on the Company's Investigational New Drug application to evaluate the COVID-19 vaccine candidate, BBV152

  • Pfizer (PFE) and Biontech (BNTX) receive positive CHMP opinion for COVID-19 vaccine in children 5-12 in EU

  • Selecta Biosciences (SELB) announces that FDA places clinical hold on Phase 1/2 clinical trial of SEL-302

  • Supernus Pharma (SUPN) announced that it was the recent target of a ransomware attack

  • Tencent (TCEHY): State run companies in China are restricting employee use of Tencent, according to the Wall Street Journal

  • Tesla (TSLA) to spend $188 mln to expand factories in Shanghai, according to Reuters

  • Uber (UBER) to close most service in Belgium following court ruling, according to TechCrunch


  • M&A:

  • Flora Growth (FLGC) has entered into a definitive agreement with Canada-based Avaria Health & Beauty Corp. to form FloVaria Corp., a joint venture company equally owned by Flora and Avaria

  • Kansas City Southern (KSU) and Canadian Pacific Railway Limited (CP) have received the required regulatory pre-transaction control approvals from the Mexican Federal Economic Competition Commission and the Mexican Federal Telecommunications Institute for the previously announced proposed combination of KCS and CP


  • Syndicate:

  • Atea Pharmaceuticals (AVIR) files for mixed securities shelf offering; also files sales agreement prospectus supplement covering up to $200 mln stock offering

  • Bank7 (BSVN) files for 5,758,240 share common stock offering by selling shareholders

  • Pershing Square Tontine Holdings (PSTH) announced that it has filed a registration statement with the SEC relating to the proposed public offering of its subscription warrants to purchase common stock, or SPARs

  • Quotient (QTNT) files for 2,776,792 share common stock offering by selling shareholders

  • SilverBow Resources (SBOW) files for 1,351,961 share common stock offering by selling shareholder


  • IPOs:

  • Expected to Price:

  • No IPOs expected.



Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • No upgrades of note.


  • Downgrades:

  • Vonage (VG) downgraded to Equal Weight from Overweight at Barclays; tgt raised to $21


  • Others:

  • LianBio (LIAN) initiated with a Buy at Jefferies

  • LianBio (LIAN) initiated with a Buy at BofA Securities


Upcoming Events:

  • Econ Data:

  • No economic data of note.


  • Earnings:

  • Monday (Nov 22)

  • Morning: AVYA CRNC SR TWST ZH

  • Afternoon: A ARWR JACK KEYS URBN ZM


  • Tuesday (Nov 23)

  • Morning: ANF AEO AMWD ADI BBY BURL ROAD CBRL DKS DLTR DY GENI SJM MDT TITN

  • Afternoon: PLAN ADSK DELL GPS GES HPQ JWN NTNX PSTG VMW


  • Wednesday (Nov 24)

  • Morning: DE KC


  • Friday (Nov 26)

  • Morning: PDD




Asia & Europe detail:

Asia: Nikkei -2.5%, Hang Seng -2.7%, Hang Seng -0.6%

Equity indices in the Asia-Pacific region ended the week on a lower note amid concerns about reports of a new coronavirus variant. Japan's Prime Minister Kishida will seek a 3.0% wage increase during Spring wage talks. Moody's affirmed Japan's A1 rating with a Stable outlook. Japan's parliament will convene for an extra session on December 6.The Bank of Korea raised its bank rate 25 bps to 1.00% on Thursday.

  • In economic data:

  • Japan's November Tokyo CPI 0.5% yr/yr (last 0.1%) and Tokyo Core CPI 0.3% yr/yr (expected 0.4%; last 0.1%)

  • Australia's October Retail Sales 4.9% m/m (expected 2.5%; last 1.3%)

  • Singapore's October Industrial Production 2.4% m/m (expected -0.5%; last -1.9%); 16.9% yr/yr (expected 14.5%; last -2.2%)


---Equity Markets---

  • Japan's Nikkei: -2.5% (-3.3% for the week)

  • Hong Kong's Hang Seng: -2.7% (-3.9% for the week)

  • China's Shanghai Composite: -0.6% (+0.1% for the week)

  • India's Sensex: -2.9% (-4.2% for the week)

  • South Korea's Kospi: -1.5% (-1.2% for the week)

  • Australia's ASX All Ordinaries: -1.8% (-1.7% for the week)

---FX---

  • USD/JPY: -1.3% to 113.84

  • USD/CNH: +0.1% to 6.3909

  • USD/INR: +0.5% to 74.87


Europe: DAX -2.6%, FTSE -2.6%, CAC -3.3%

Major European indices trade on a sharply lower note amid concerns about reports of a new coronavirus variant. Bank of England Governor Bailey repeated that supply chain issues were responsible for higher inflation. An official from Germany's Greens party said that the new coalition is not ruling out another lockdown. The French fishermen union will reportedly block the Channel tunnel and ports to protest the lack of new licenses from the U.K.

  • In economic data:

  • Eurozone's October Private Sector Loans 4.1% yr/yr (expected 4.0%; last 4.1%) and Loans to nonfinancial corporations 2.5% yr/yr (last 2.1%)

  • Germany's October Import Price Index 3.8% m/m (expected 2.0%; last 1.3%); 21.7% yr/yr (expected 19.6%; last 17.7%)

  • France's November Consumer Confidence 99 (expected 98; last 99)

  • Italy's November Business Confidence 116.0 (expected 114.0; last 115.1) and Consumer Confidence 117.5 (expected 117.0; last 118.4)

  • Swiss Q3 GDP 1.7% qtr/qtr (expected 1.6%; last 1.8%); 4.1% yr/yr (expected 3.2%; last 8.6%). Q3 Employment Level 5.213 mln (last 5.126 mln)


---Equity Markets---

  • STOXX Europe 600: -2.4% (-3.2% week-to-date)

  • Germany's DAX: -2.6% (-4.1% week-to-date)

  • U.K.'s FTSE 100: -2.6% (-3.4% week-to-date)

  • France's CAC 40: -3.3% (-3.8% week-to-date)

  • Italy's FTSE MIB: -2.9% (-3.8% week-to-date)

  • Spain's IBEX 35: -3.6% (-2.6% week-to-date)

---FX---

  • EUR/USD: +0.6% to 1.1277

  • GBP/USD: UNCH at 1.3325

  • USD/CHF: -1.1% to 0.9256


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The S&P 500 futures are up 3 points and are trading % above fair value. The Nasdaq 100 futures are up 9 points and are trading roughly in-line with fair value. The Dow Jones Industrial Average futures