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FTSE 100 edges to a 14-month high, as vaccine pharma catches a cold

Vaccine pharma catches a cold

After a solid rebound yesterday, European stocks have been slightly more subdued today, and somewhat mixed, with tech shares acting as the main drag, although any weakness has been much more modest than was the case on Tuesday.

The FTSE 100 is looking a little more solid, hitting a new 14-month high, while the FTSE 250 is also looking good, helped by the more defensive elements of the index, and a slightly weaker pound. The pharmaceutical sector has underperformed today on the back of the EU following the US in saying it was open to the idea of patent waivers for coronavirus vaccines. AstraZeneca has avoided the worst of the fallout here, given it is providing the vaccine at cost, and as such won’t suffer any potential hit to profits from any waiver, unlike its peers. Who said altruism is a bad thing?

Next has been one of the retail outperformers over the last 12 months, despite being exposed to one of the worst retail environments in modern times, with the shares pushing above their pre-pandemic peaks of 2020, and posting new record highs in April, in a narrative completely counter to the wider retail environment. Rather than fight against the effects of the pandemic, the shutdowns merely served to force Next to accelerate its transition to online an area in which it was already very strong. This strength allowed management as they put it, to “follow the new money”.

Just over a month ago, Next raised its full year guidance for 2022 for pre-tax profits of £700m, on the basis that online sales in February and March would pick up the slack from the closure of retail stores, a trend borne out by the UK’s March retail sales numbers, which saw big jumps in the sales of clothing. This morning the company raised its guidance again, this time pushing it up to £720m, helping to push the shares up to new record highs, after Q1 sales beat expectations by £75m, as a result of the recent reopening of stores which released pent-up demand.  

Superdry shares have soared today after the retailer reported a return to revenue growth in Q4, albeit a fairly modest one of 0.8%. Full year revenues were still down 21% at £556.6m, with stores down 50.9%, however the e-commerce channel helped offset some of that, with a gain of 33.8%, generating £202.9m. Given how well Next has performed over the last 12 months the improvements in the e-commerce channel for Superdry are very encouraging, and bodes well for the next fiscal year. Investors would seem to agree, sending the shares to fourteen-month highs, and higher by over 20%.  

Having seen its share price reach 13-month highs in April, Barratt Developments share price has drifted off a touch, however momentum continues to look positive after a fairly decent trading update today, which showed that full year completions were expected to come in ahead of expectations. Fully forward sales for 2021 have seen an increase to £3.7bn, rising above the £3.65bn level achieved back in 2019 pre pandemic, with private reservation levels also above 2019 levels. Barratt also said it was repaying £3.5m of business rates relief, while pledging to target a full year dividend of 2.5 times earnings. The statement also the housebuilder expects to deliver between 16,000 and 16,250 homes in the current fiscal year.   

Aston Martin’s share price has traded sideways for most of this year as investors weigh up progress after last year’s big losses, with the jury remaining out on new owner Laurence Stroll's turnaround plan. Early indications look positive, with the share price edging higher after a fairly decent Q1 which has seen a big jump in revenues, driven by rising demand in China and the US, though this also needs to be seen through the prism of low demand from a year ago when economies were shutting down, due to the pandemic.

Revenues rose 153% to £224.4m, which helped narrow losses before tax to £42.2m. The new DBX helped drive a lot of the sales in Q1, accounting for 55% of the total volume of 1,353 vehicles. In terms of 2021 guidance this was left unchanged at 6,000 sales, with adjusted earnings set to be weighted to the second half of this year, with the shares giving up most of their early day gains.

Darktrace shares began trading unconditionally on the London market today, with the shares edging higher after a positive debut last week which saw the shares rise sharply from their 250p initial IPO price.


US markets have open mixed after yesterday’s sharp sell-off, with the Dow remaining fairly resilient, after weekly jobless claims hit a new post pandemic low of 498,000, falling from 590,000 last week. The Russell 2000 is by far the worst performer, slipping back by over 1%. Today’s biggest decliners have been vaccine pharma after the EU followed the US in saying it was open to the idea of patent waivers for coronavirus vaccines.  

If this was agreed on a global scale by the World Trade Organisation it could potentially allow other companies to manufacture the newly engineered vaccines without fear of being sued by the company that owns the patent for developing the vaccine. This would of course mean that companies like Pfizer, Curevac, BioNTech and Novavax would find it difficult to charge the high prices per dose that they are currently doing as they could face great competition, hence the sharp declines being seen in their share prices. Of course, apart from the practical difficulties of the mass production of vaccines, the downside to this coming to pass is that any future innovation or investment into new vaccine technology could be harder to come by if governments at the very first sign of an emergency, overturn the legal patent protections which go with any new discovery or technology.  

Moderna shares are also lower, for the same reasons above, despite recording better than expected Q1 profits of $2.84 a share, beating expectations of $2.60 a share. Revenues were slightly disappointing coming in short of estimates of $2.29bn, at $1.9bn, with the shares weighed down by reports of patent waivers being granted on its vaccine

Jessica Alba’s Honest company saw its shares jump out of the blocks yesterday as it listed on the Nasdaq at a premium to its IPO price of $16, raising $412.8m in the process as it closed up near $23, giving it a market cap of $2bn. The company which was founded over 10 years ago saw sales of $300.5m last year, posting losses of $14.5m. In its filing the company said it expects these losses to continue, though are expected to be lower at around $5m, as margins improve. Today its shares have slipped back 3% in early trade.    

Uber’s latest Q1 results showed that losses narrowed sharply to $108m, with the food delivery business outperforming, while the sale of its self-driving unit ATG for $1.6bn also helped. The $108m loss compares favourably with the Q4 loss of $968m however despite the benefit from the $1.6bn that it received for ATG, the company still wasn’t able to turn the red ink to black. Q1 revenues also fell short of expectations, coming in at $2.9bn, while on an operational level Uber’ s losses were still high at $1.5bn. The size of this deficit does rather call into question Uber’s optimism that they can turn a profit by year end, given the potential for higher driver costs, and it would appear that markets share this scepticism with the shares lower on the day.

Coinbase shares have continued to fall, set for their fourth successive daily loss, despite fairly healthy turnover in crypto assets and Ethereum posting yet another record high.


The pound is on course to be the worst performer today despite the Bank of England raising its annual GDP forecast for the UK economy from 5% to 7.5%, while also announcing that it was reducing the amount of bonds it was buying on a weekly basis to £3.4bn.

Governor Andrew Bailey was at pains to insist that this operational decision was not a tapering of asset purchases, probably so as not to raise expectations of further reductions, however it is hard to describe it any other way. If it walks like a duck and quacks like a duck, it’s a duck, and it would be hard to imagine the Bank of England embarking on such an action if the economy were struggling, as opposed to about to start on a growth spurt. Chief economist Andrew Haldane was a lone dissenter arguing for a £50bn reduction in asset purchases to £825bn.

Despite this optimistic outlook the pound has slipped back from two-week highs against the euro, and also fallen back against the US dollar. The US dollar is also under pressure again slipping back towards last week's lows, losing the most ground against the Swiss franc and the euro.     


While stock markets are struggling for gains today, there are no such concerns for metals prices with copper prices hitting their highest levels in 10 years, as it gains a foothold above $4.50, looking on course to match its record highs set in February 2011.

Expectations that long term yields will remain benign, as well as a weaker US dollar appears to be providing an uplift to gold prices, which have pushed back through the $1,800 level, and their highest levels in over two months.  

Crude oil prices have pulled back a touch after yesterday's test of the $70 a barrel level as it becomes apparent that the situation in India appears to be spilling out into neighbouring countries, thus raising the possibility of further lockdown measures beyond its borders. Not only are infections still rising in India, but cases are now starting to rise further out with cases rising in Afghanistan, Pakistan and Bangladesh. If this trend continues then demand in Asia could be at risk of a further slowdown, as an economic rebound gets delayed as countries wrestle with rising cases.

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