• Natalie Grimes

Market Roundup



Spotlight on a Company – Pfizer Inc

Pfizer Inc (PFE) share price soared this week by over 10%, closing on Friday at 11.13. This followed the company’s momentous announcement of antiviral pill set to cut hospitalisation risk by a staggering near 90%, fuelling investors to rally up shares instantly. Energizing investor confidence in the travel industry and consumer demand, numerous stocks saw rises. Expedia shares skyrocketed by over 15% with net profits of $379 million, whilst United Airlines and Royal Caribbean also saw significant growths. Analysts expect a slowdown in these share sales from 2022, foreseeing a long-anticipated end to the pandemic.


This announcement also proved detrimental to other pharmaceutical firms’ stocks whose treatments are less effective, such as Merck’s (MRK) where risk of hospitalisation is only cut by 50%. Their share prices consequently took a big hit following Pfizer’s success, falling by over 9%.


US – S&P 500

The S&P 500 closed at 4698 on Friday, up by 2.03% on the week before. Outperforming its own weekly gains since June, S&P 500’s growth of nearly 40% far surpassed anticipated rates of 27%. Healthcare companies are largely to thank for these increases, with Pfizer Inc stimulating investors to snap up shares.


Tesla was a significant faller this week. Despite maintaining a 45% increase this year, the electric vehicle company’s share price fell by 10%. Founder Elon Musk’s decision following Twitter poll to sell $5 billion of shares in the company largely provoked this plummet. Other motivators behind this fall include increased competition from rising technology firms in autonomous driving such as Nvidia, and Jeff Bezos-backed Rivian. The company worth over $1 trillion must therefore find new ways to maintain its competitive advantage and differentiate itself in this budding market. Other fallers this week include PayPal down by 10%.


US interest rates remain unchanged at 0.25% this week. Consumer prices have increased over 6% this year to October, far from their 2% target, but the Fed described this inflation as “transitionary”. Fed Chair Powell justified this dovish approach through a weak labour market, with five million less in the labour force compared to February 2020. It is likely these low rates will be maintained into 2022 to fuel labour recruitment.


UK – FTSE 100

Bank of England’s surprise decision to keep interest rates at 0.1% shocked the market this week. Despite the likelihood of base rate increases in the near future remaining, to keep in line with 2% inflation targets, a more expansionary monetary policy is currently maintained. Continued efforts to fuel consumer spending and investment highlight a weaker recovery from the pandemic following the reopening of many firms, with UK GDP increasing in Q3 by 0.2% less than projected. The recent fuel crisis leading to raw material shortages exacerbated this uncertainty, provoking unprecedented changes to supply chains for firms and surges in energy prices.


FTSE 100 closed at 7,306.96 on Friday. The energy sector was particularly successful, with both BP and Royal Dutch Shell up this week. BT Group was amongst the top performers increasing by over 10%, as well as medical technology company Smith & Nephew. The banking sector suffered following the decision to leave interest rates unchanged, with many stocks down this week. Big names such as NatWest Group PLC and Barclays PLC stocks’ all dropped following the announcement, and the pound weakened by 0.1%.


Japan - NIKKEI 225

The Japanese market had a strong week following PM Kishida’s win in elections under his Liberal Democratic Party. Proposing tens of billions of economic injections and a pledge for an increased budget to propel the country’s recovery following COVID-19, the Nikkei 225 index closed on Friday with increases of 2.5%. This indicates investor confidence in Kishida’s proposals.


Overview

Overall a positive week for global markets, with promising COVID-19 announcements and energy sector gains in the UK. Recovery following the pandemic is increasing again following the reopening of many economies. US and UK central bank decisions on the maintenance of low interest rates hit some stocks hard, however the long-term looks optimistic, with the lower rates aiding further economic activity.

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