Stocks mostly advance but vaccine stocks hit

First time US jobless claims plunged last week to under 500,000 last week for the first time since the Covid-19 pandemic struck
·3 min read

European and US equities moved mostly higher on Thursday with encouraging data providing more indications of the strength of the US economic recovery.

Shares in vaccine manufacturers slumped, however, after the United States and several European nations backed lifting patents for coronavirus vaccines.

Wall Street initially failed to gain much traction from data showing that new US jobless claims plunged by 92,000 last week to under 500,000 for the first time since the start of the pandemic.

That followed a report on Wednesday showing that US private firms added 742,000 jobs in April, with much of them in the crucial services sector, which was hardest hit by virus lockdowns and other restrictions last year.

Official US government data on non-farm payrolls is due out Friday.

The blue-chip Dow nevertheless struck a new intra-day high. The broader S&P 500 rose marginally and tech-heavy Nasdaq Composite was lower in late morning trading. analyst Patrick O'Hare said the drop in jobless claims is "consistent with an economy that is reopening and necessitating more hiring activity".

He also pointed to data showing labour productivity rising at a 5.4 percent annual rate and unit labour costs decreasing at a negative 0.3 percent rate.

He said these figures "will continue to feed the Fed's patience for holding its easy policy line despite clear signs of commodity cost inflation."

Worries that a surge in inflation as economies reopen will push the US Federal Reserve to raise rates have kept investors on edge and put on a brake on the months-long rally that has seen US stocks strike new highs.

- Vaccine stocks hit -

Shares in vaccine manufacturers posted double digit drops after the EU and Russia followed the United States in signalling they are open to the idea of patent waivers for coronavirus vaccines.

"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," said Michael Hewson at CMC Markets UK.

They later recovered much of those losses.

Shares in Pfizer were down 1.6 percent and its German partner BioNTech 1.9 percent in late morning trading in New York.

Shares in Moderna, which also has an approved mRNA vaccine like Pfizer-BNTech, dropped by 4.1 percent.

Curevac and Novovax, which have yet to have their vaccines approved for use, saw drops of 7.1 and 1.9 percent respectively.

Meanwhile, the Bank of England said that the UK economy will enjoy a stronger-than-expected recovery this year after the government began easing its coronavirus pandemic lockdowns quicker than anticipated.

It now forecasts that Britain's economy will rebound by 7.25 percent this year, compared to a 5.0 percent gain it forecast in February.

London stocks closed higher. The pound fell against the dollar and euro.

Global equities had rebounded Wednesday as investors focused on bright earnings and data pointing to an economic recovery.

- Key figures around 1530 GMT -

New York - Dow: UP 0.4 percent at 34,351.71 points

EURO STOXX 50: DOWN 0.3 percent at 3,990.71

London - FTSE 100: UP 0.5 percent at 7,076.17 (close)

Frankfurt - DAX 30: UP 0.2 percent at 15,196.74 (close)

Paris - CAC 40: UP 0.3 percent at 6,357.09 (close)

Tokyo - Nikkei 225: UP 1.8 percent at 29,391.19 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 28,637.46 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,441.28 (close)

Euro/dollar: UP at $1.2055 from $1.2005 at 2100 GMT

Pound/dollar: DOWN at $1.3878 from $1.3905

Euro/pound: UP at 86.83 pence from 86.33 pence

Dollar/yen: DOWN at 109.09 yen from 109.21 yen

Brent North Sea crude: DOWN 0.5 percent at $68.60 per barrel

West Texas Intermediate: DOWN 0.7 percent at $65.16 per barrel