Plus, stocks are up after President Trump said the U.S.-China phase one trade deal is still “fully intact” after confusion following a statement from trade advisor Peter Navarro, six global investors inked a $20.7 billion agreement with the Abu Dhabi National Oil Company, and Wirecard’s former CEO has been arrested.
Stocks were higher to start Tuesday with the Dow adding 140 points, or 0.5%. The S&P 500 and Nasdaq both gained 0.6%, while the Nasdaq hit an intraday record high.
Confusion over comments made by White House trade advisor Peter Navarro on the U.S.-China phase one trade deal roiled markets over night. During an interview with Fox News’ “The Story,” when asked if, given everything that has happened since the signing of the deal, if it was over, Navarro responded, “It’s over. Yes.” Navarro has since walked back that statement, saying that it was taken “wildly out of context.” Following the confusion, President Donald Trump tweeted that the phase one trade deal is “fully intact.” Chinese officials have insisted that they still intend to stick to the deal, which includes increasing imports from the U.S. by $200 billion over the next two years, though reaching the targets laid out in the deal has become difficult amid the coronavirus crisis. “Everyone thinks what happened was very strange and it created confusion,” said Zhou Hao, an economist at Commerzbank AG. “At the end of the day, what investors care about is whether this trade deal still exists, and they would feel alright as long as officials don’t tear up the agreement publicly. The collapse of the deal is still a low-risk scenario.”
Speaking of the coronavirus, Dr. Anthony Fauci and other top health officials are testifying before a House committee this morning on the U.S. response to the pandemic. Fauci has spoken to the major vaccines in development, and specifically mentioned Moderna’s vaccine candidate, which is set to begin late-stage testing in July. The CDC Director, Dr. Robert Redfield, urged Americans to get a flu vaccine as the coronavirus and seasonal flu this fall could place a “tremendous burden” on hospitals. Elsewhere, as cases rise in states across the nation, Texas Governor Greg Abbott said that “additional measures are going to be necessary” and the state will have to take “tougher actions” if daily coronavirus cases and hospitalizations continue to climb at the rate they are now into July. “The way hospitalizations are spiking, the way that daily new cases are spiking—surely the public can understand that if those spikes continue, additional measures are going to be necessary to make sure we maintain the health and safety of the people of the state of Texas,” Abbott said when asked if he will roll back some of the state’s reopening measures. Meanwhile, Utah’s top state epidemiologist, Dr. Angela Dunn, warned that the state is currently in an “acceleration phase” of the COVID-19 outbreak and warned that a second shutdown may be the only option. “We are quickly getting to a point where the only viable option to manage spread and deaths will be a complete shutdown,” Dunn said in a memo. “This might be our last chance for course correction. Contact tracing and testing alone will not control this outbreak.”
Translate Bio shares are up more than 42% this morning after Sanofi said its Pasteur division will spend up to $1.9 billion to deliver a COVID-19 vaccine by mid-2021 using the messenger RNA technology from the biotech startup. Translate Bio’s and Sanofi’s coronavirus vaccine is likely to start human trials in the fourth quarter of this year. “The expansion of our collaboration with Sanofi Pasteur validates the progress we’ve made in the development of mRNA vaccines for infectious diseases since our work together began in 2018 and also speaks to the potential of our mRNA platform. We are excited to work with Sanofi in this broadened capacity with the goal of ultimately delivering vaccines on a global scale, a need underscored by the current pandemic,” said Translate Bio CEO Ronald Renaud in the announcement. “Translate Bio will also be well positioned financially to continue to build upon our internal capabilities with a focus on advancing innovations in platform discovery and on the development of ongoing and additional preclinical therapeutic programs as we aim to bring multiple programs towards clinical development.”
A consortium of six global investors have entered into a $20.7 billion agreement with Abu Dhabi National Oil Company (ADNOC), the state-owned oil company said today. The group will invest $10.1 billion to acquire a 49% stake in a newly-formed subsidiary, ADNOC Gas Pipeline Assets, with lease rights to 38 pipelines, as part of the agreement, while ADNOC will hold the majority stake of 51% and will retain ownership of the pipelines. The deal marks the single-largest energy infrastructure investment in the region, and the largest in the world this year. The six companies involved are Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities, and Snam. “We are excited to have completed this deal, and once again partner with some of the world’s leading infrastructure and institutional investors, said Sultan al-Jaber, CEO of ADNOC Group and UAE’s minister of state. “It is in fact a huge achievement, particularly given the current challenging economic climate and business environment, and it is, if anything, a testament to Abu Dhabi and the UAE’s position as a trusted, reliable and credible investment destination.”
And Wirecard is back in the headlines this morning, after the German finch’s former CEO was arrested in Munich as the missing $2.1 billion has triggered calls from the government for urgent regulatory reform. Markus Braun, who resigned last week after news of the scandal broke, turned himself in late Monday as part of the probe into the company’s accounting practices, and has been granted bail of 5 million euros ($5.67 million). The Wirecard scandal has become a national embarrassment for Germany and has prompted the country’s finance minister, Olaf Scholz, to call for urgent reforms. “Auditors and regulators don’t seem to have been effective here,” Scholz said. “We need to quickly clarify how we have to change our regulatory requirements in order to be able to monitor complex corporate networks across the board, promptly and quickly.”
Stocks We’re Watching
Karyopharm Therapeutics (NASDAQ: KPTI): Karyopharm shares are up more than 6% this morning following its announcement that the FDA has approved oral XPOVIO (selinexor), the biotech’s first-in-class, Selective Inhibitor of Nuclear Export (SINE) compound, for the treatment of relapsed or refectory diffuse large B-cell lymphoma (DLBCL) in adult patients. “The accelerated approval of oral XPOVIO in patients with relapsed or refractory DLBCL is a significant milestone for the patients and families who currently have limited treatment options available for their disease,” said Sharon Shacham, PhD, MBA, Founder, President and Chief Scientific Officer of Karyopharm. “This approval marks the first for an oral agent for patients with previously treated DLBCL and the first approval of any single drug for this highly aggressive type of lymphoma. Additionally, this is now the second commercial oncology indication for XPOVIO, highlighting its novel mechanism of action, ease of administration and ability to produce rapid and durable responses in patients with heavily pretreated disease. We share this tremendous achievement with the patients, employees, caregivers and physicians who have tirelessly contributed to the advancement of XPOVIO from its original discovery and clinical development to today’s second FDA approval.”