Month: July 2021

Pfizer and BioNTech have reached an agreement with a South African company to produce their COVID-19 vaccine for distribution in Africa, the biotechnology companies said Wednesday.

The Biovac Institute in Cape Town will manufacture 100 million doses of the vaccine annually starting in 2022. The company will mix vaccine ingredients it receives from Europe, place them in vials and package them for distribution to the 54 countries in Africa.

The agreement may eventually help alleviate vaccine shortages on a continent where the Africa Centers for Disease Control and Prevention says less than 2% of its population of 1.3 billion has received at least one dose. 

Pfizer CEO Albert Bourla said the company’s goal is to provide people throughout Africa with the vaccine, a departure from previous bilateral agreements that saw most doses being sold to wealthy countries.

The Johnson & Johnson vaccine is already being manufactured in South Africa in a similar “fill and finish” process that has the capacity to produce more than 200 million doses annually. The vaccines are also being distributed across the African continent.
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Heavy rainfall forced the subway system in Zhengzhou, capital of China’s Henan province, to shut down Tuesday, stranding passengers.

Riders posted videos on social media as they awaited rescue in waist-high muddy waters. A passenger named Xiaopei posted on Weibo that “the water in the carriage has reached (their) chest.”

Around 300 people have been rescued so far, and an unknown number remain trapped.

Local media outlets report that train floodwaters were lowering.

Henan province, home to about 94 million people, experienced severe rains through the past week. On Tuesday, the region’s meteorological station issued the highest threat level, a red warning, as rains are expected to continue for the next 24 hours, Reuters reported.

A representative of the city of Xu Liyi, a member of the Standing Committee of Henan Provincial Party Committee, and Secretary of the Zhengzhou Municipal Party Committee said the high levels of rainfall were unusual.

Extreme weather events have surged this summer in China, with recent flooding in Sichuan province killing hundreds of citizens and forcing thousands to evacuate the area. Officials of Greenpeace International, an environmental group, warn that China’s rapid urbanization will increase the frequency of climate disasters.

Speaking to the Chinese media, Liu Junyan of Greenpeace said “because of the highly concentrated population, infrastructure and economic activity, the exposure and vulnerability of climate hazards are higher in urban areas.”

This report contains information from Reuters.
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Resurgent pandemic worries knocked stocks lower from Wall Street to Tokyo on Monday, fueled by fears that a faster-spreading variant of the virus may upend the economy’s strong recovery. 

The S&P 500 fell 68.67, or 1.6%, to 4,258.49, after setting a record just a week earlier. In another sign of worry, the yield on the 10-year Treasury touched its lowest level in five months as investors scrambled for safer places to put their money.  

The Dow Jones Industrial Average slumped 725.81, or 2.1%, to 33,962.04, while the Nasdaq composite lost 152.25, or 1.1%, to 14,274.98. 

Airlines and other companies that would get hurt the most by potential COVID-19 restrictions took some of the heaviest losses, similar to the early days of the pandemic in February and March 2020. United Airlines lost 5.5%, mall owner Simon Property Group gave up 5.9%, and cruise operator Carnival fell 5.7%. 

The selling also circled the world, with several European markets sinking roughly 2.5% and Asian indexes down a bit less. The price of benchmark U.S. crude, meanwhile, fell more than 7% after OPEC and allied nations agreed on Sunday to eventually allow for higher oil production this year. 

COVID numbers 

Increased worries about the virus may seem strange to people in parts of the world where masks are coming off, or already have, thanks to COVID-19 vaccinations. But the World Health Organization says cases and deaths are climbing globally after a period of decline, spurred by the highly contagious delta variant. And given how tightly connected the global economy is, a hit anywhere can quickly affect the other side of the world. 

Even in the U.S., where the vaccination rate is higher than in many other countries, people in Los Angeles County must once again wear masks indoors regardless of whether they’re vaccinated following spikes in cases, hospitalizations and deaths. 

Across the country, the daily number of COVID-19 cases has soared by nearly 20,000 over the past two weeks to about 32,000. The vaccine campaign has hit a wall, with the average number of daily inoculations sinking to the lowest levels since January, and cases are on the rise in all 50 states. 

Economic growth expected

That’s why markets are concerned, even though reports show the economy is still recovering at a fantastically high rate and the general expectation is for it to deliver continued growth. Any worsening of virus trends threatens the high prices that stocks have achieved on expectations the economy will fulfill those lofty forecasts. 

Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient. The S&P 500 has had just two down weeks in the past eight, and the last time it had even a 5% pullback from a record high was in October.  

Several analysts pointed to that backdrop of high prices and very calm movements for weeks while dissecting Monday’s drop. 

“It’s a bit of an overreaction, but when you have a market that’s at record highs, that’s had the kind of run we’ve had, with virtually no pullback, it becomes extremely vulnerable to any sort of bad news,” said Randy Frederick, vice president of trading and  derivatives at Charles Schwab. “It was just a matter of what that tipping point was, and it seems we finally reached that this morning” with worries about the delta variant. 

He and other analysts are optimistic stocks can rebound quickly. Investors have been trained recently to see every dip in stocks as merely an opportunity to buy low.  

Barry Bannister, chief equity strategist at Stifel, was more pessimistic. He said the stock market may be in the early stages of a drop of as much as 10% following its big run higher. The S&P 500 nearly doubled after hitting its bottom in March 2020.  

“The valuations, they just got too frothy,” he said. “There was just so much optimism out there.” 

The bond market has been louder and more persistent in its warnings. The yield on the 10-year Treasury tends to move with expectations for economic growth and for inflation, and it has been sinking since late March, when it was at roughly 1.75%. It fell to 1.20% Monday from 1.29% late Friday. 

Analysts and professional investors say a long list of potential reasons is behind the sharp moves in the bond market, which is seen as more rational and sober than the stock market. But at the heart is the risk the economy may be set to slow sharply from its current, extremely high growth.  

Risks to economy

Besides the new variants of the coronavirus, other risks to the economy include fading pandemic relief efforts from the U.S. government and a Federal Reserve that looks set to begin paring back its assistance for markets later this year.  

Monday’s selling pressure was widespread, with nearly 90% of the stocks in the S&P 500 lower. Even Big Tech stocks fell, with Apple down 2.7% and Microsoft 1.3% lower. Such stocks seemed nearly immune to virus fears during earlier downturns, rising with expectations for continued growth almost regardless of the economy’s strength.  

Across the S&P 500, analysts are forecasting profit growth of nearly 70% for the second quarter from a year earlier. That would be the strongest growth since 2009, when the economy was climbing out of the Great Recession.  

But just like worries are rising that the economy’s growth has already peaked, analysts are trying to handicap by how much growth rates will slow in upcoming quarters and years for corporate profits. 
 
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