By Geoffrey Smith
Investing.com -- Vaccine makers are under pressure again as the EU says it's willing to talk about a waiver for intellectual property protection to speed up the global vaccination campaign. SEC head Gary Gensler is set to rip into Robinhood. Citadel and others at a House hearing into the meme stock craziness. Jobless claims and the Challenger Job Cuts survey are due, along with a host of earnings led, appropriately enough, by Moderna (NASDAQ:MRNA). Central banks from the U.K. to Turkey hold court, and China's relationships with the West take another couple of turns for the worse. Here's what you need to know in financial markets on Thursday, May 6th.
1 Moderna, BioNTech struggle as EU says it’s open to vaccine IP waiver
Shares in BioNTech fell as much as 19% in Germany after the European Commission said it was willing to discuss a plan to waive intellectual property rights for Covid-19 treatments while the pandemic lasts.
The idea, mooted on Wednesday by U.S. presidential trade adviser Katharine Tai, had already caused sharp declines in the stocks of Pfizer (NYSE:PFE), BioNTech and Moderna, which would have the most to lose financially from such a step.
Moderna is due to report its first-quarter earnings at 7 AM ET (11 AM ET), only three days after Pfizer sharply revised up its revenue estimates for the year, due largely to the success of its messenger RNA-based vaccine. mRNA drugs have so far avoided the health scares that have dogged Johnson & Johnson (NYSE:JNJ) and AstraZeneca (NASDAQ:AZN).
The move by the Biden administration hints at an attempt to win hearts and minds outside the U.S., which could gain considerable political capital in enabling faster vaccine distribution in poorer countries such as India and Brazil. It faces considerable legal challenges from the pharma sector, however.
2 SEC head Gensler to take aim at trading apps
The head of the Securities and Exchanges Commission dropped his clearest hint yet that he is planning new regulation to clamp down on the wild trading exemplified by the spike in GameStop (NYSE:GME) and other ‘meme stocks’ earlier in the year.
In prepared remarks ahead of an appearance before the House Financial Services Committee later Thursday, Gary Gensler criticized Robinhood and other brokers for embedding gamelike features in their apps to boost trading volumes.
“Many of our regulations were largely written before these recent technologies and communication practices became prevalent,” Gensler is set to say. “I think we need to evaluate our rules, and we may find that we need to freshen up our rule set.”
3 Stocks flat ahead of jobless claims, Challenger survey; earnings aplenty
U.S. stocks are set to open largely unchanged against the backdrop of the latest Biden administration initiatives that indicate a drift toward crimping corporate profits.
In addition to the vaccine waiver idea, the administration also cancelled a Trump-era rule on Wednesday that made it easier for companies not to classify gig workers as employees, reinforcing concerns about cost pressures that pushed Uber (NYSE:UBER) stock down 3.5% after hours to a four-month low.
By 6:15 AM ET (1015 GMT), Dow Jones futures and S&P 500 futures were both down by less than 0.1%, while Nasdaq 100 futures were up by the same amount.
Weekly jobless claims at 8:30 AM ET and the Challenger Job Cuts survey dominate a light data calendar, while Fiverr, Regeneron (NASDAQ:REGN), Norwegian Cruise Lines, Wayfair (NYSE:W), Kellogg (NYSE:K), Blue Apron, Penn National Gaming (NASDAQ:PENN) and Magna, among others, all release quarterly figures. Overnight, Anheuser-Busch InBev said its long-standing CEO Carlos Brito would step down
4. Central banks shuffle toward tightening at different speeds
It’s a big day for sterling, although you wouldn't know it yet. The Bank of England is expected by many to raise its economic forecasts for the year and beyond at its regular policy meeting, which may or may not be accompanied by changed guidance on when it will start to taper asset purchases. There are also local elections which could pave the way for another independence vote in Scotland.
So far, Canada is the only advanced economy central bank to have taken its foot off the monetary gas pedal this year. The U.K. economy expanded at its quickest pace since 2013, according to IHS Markit’s final composite purchasing manger index released earlier, with sharp rises in input prices in both manufacturing and services.
Elsewhere on the central bank scene, Norway repeated its intention to hike interest rates later this year, while Turkey and Czechia also have monetary policy meetings. On Wednesday, Brazil had hiked its key rate by 75 basis points, again illustrating the divergence between emerging and advanced economy monetary policy.
5. G7 gangs up on China, which takes out its frustration on Australia
One of the world’s most important trade relationships took another turn for the worse, the latest step in the economic alienation of China from the West.
China said it will suspend its strategic economic dialogue with Australia, after the latter moved to cancel a number of Chinese investments in Australia under its ‘Belt and Road’ initiative. China has already sharply reduced its purchases of Australian barley and coal, but not iron ore, which remains essential for fueling its infrastructure boom.
The move came a day after the G7, which includes European countries and Japan but not Australia, issued a statement condemning China for its human rights abuses against its Muslim minority in Xinjiang, and for its insistence on blocking Taiwan from World Health Organization forums. The statement paves the way for more concrete actions to be at least discussed at a G7 summit in July.