By Geoffrey Smith
Investing.com -- Stocks are set to rebound after their stumble late on Tuesday, but the stock that caused that stumble - Moderna - is still heading down in premarket as the hype over its experimental Covid-19 drug abates. Oil prices are consolidating near recent highs after API data showed a drop in U.S. crude stocks, while two of the world's biggest emerging economies are now the world's virus hotspots. The U.K. borrowed at negative interest rates for the first time, and Lowe's (NYSE:LOW) and Target (NYSE:TGT) have their quarterly numbers out . Here's what you need to know in financial markets on Wednesday, May 20th.
1. Moderna hype deflates - after stock sale
Moderna stock is continuing to fall in premarket after a well-respected health news site suggested that the biotech company hasn’t made the degree of progress towards developing a successful vaccine that it would like the stock market to believe.
The website Stat argued that the company’s press release on Monday, which referenced the antibodies created by its experimental drug, contained too few details and was too small to be of meaningful substance.
Moderna's (NASDAQ:MRNA) stock fell 10% in the wake of the report, and is down another 3.2% in premarket. The move is the more interesting for the fact that the company used the spike in its share price to raise over $1.3 billion in new equity. At the premarket prices, investors who bought into that are already 10% under water.
2. Brazil, Russia are the new virus hotspots
The Covid-19 pandemic’s new hotspots are increasingly to be found in emerging markets.
Brazil’s daily death toll reached a new high of nearly 1,200 on Tuesday, while Russia continues to report over 10,000 new cases a day.
Russia now has 300,000 confirmed cases while Brazil has 272,000, according to Johns Hopkins data.
In both countries, the figures are clouded by uncertainty due to the incomplete nature of testing, while Russia in particular has been criticized for attributing thousands of Covid-19 deaths to other causes. Russian Prime Minister Mikhail Mishustin only recently returned to work after contracting the virus in March.
Elsewhere, the Dutch government said it was “plausible” that a worker on a mink farm had contracted the virus from one of the animals there, which would represent the first known case of transmission to humans from species other than bats.
3. Stocks set to rebound
U.S. stock markets are set to open higher, recovering from their stumble in late trading on Tuesday after the Stat report on Moderna.
By 6:30 AM ET (1030 GMT), the Dow Jones 30 futures contract was up 278 points or 1.2%, while the S&P 500 futures contract was up 1.1% and the Nasdaq 100 futures contract was up 1.0%.
In focus later will be Johnson & Johnson (NYSE:JNJ), which announced late on Tuesday it will stop selling its talc products amid a backdrop of ongoing legal claims that it causes cancer. Lowe's and Target will also be under the microscope after reporting quarterly earnings. Lowe's stock rose 11% in premarket after its numbers, while Target stock was down 0.7%.
In addition, the minutes from the last Federal Reserve policy meeting will also be released later, but will be of largely historical interest.
4. U.K. borrows at negative rates for first time
The U.K. government sold bonds at a negative interest rate for the first time ever, as speculation on another cut in the Bank of England’s official interest rates grows.
The Treasury sold three year notes at an average yield of -0.003%, hours ahead of a speech by Bank of England Governor Andrew Bailey that is expected to effectively confirm the bank’s intention to push its key rate below 0% at its next policy meeting.
The action has already been flagged by the bank’s chief economist Andrew Haldane and other members of the Monetary Policy Council.
Sterling was broadly stable at $1.2264, shrugging off more dire news from the corporate sector as aero engine maker Rolls Royce (LON:RR) said it would cut nearly 1/5 of its workforce.
5. Oil firm as API reports inventory drop
Oil prices stabilized near recent highs after the American Petroleum Institute estimated that crude stocks fell by 4.8 million barrels last week – the first decline since March and the biggest one since January.
The data fleshed out arguments that the global market is rebalancing as fuel use picks up and suppliers rein in output. Reuters reported earlier that Russia’s oil and condensate output in the first two weeks of May was nearly 2 million barrels a day below April levels.
The U.S. government’s data on domestic supplies are due as usual at 10:30 AM ET.