European Markets Lower amid EU Vaccine Shortage

29 Jan 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Disagreements between the EU and AstraZeneca
  • A negative scenario for European stocks

The EU is set to tighten rules over the export of coronavirus vaccines. It appears that the EU does not have enough Covid-19 vaccine doses and the shortage has prompted some officials to suspend the administration of the jab. Additionally, the shortage caused tension between European Markets over exports of vaccine doses. There is also a dispute with AstraZeneca, a pharmaceutical company, which failed to deliver what it promised.

Following the euphoria about the discovery of several vaccines that showed good results, governments are now going through a reality check that is showing that demand outstripping the supply substantially. Even though companies are ramping it up, EU member states are showing signs of frustration over the most recent vaccine rollout. According to EU officials, AstraZeneca has promised that it can deliver as little as a quarter of the hundred million doses that it was expecting in the first quarter of this year.

In August, the European Union signed a deal with AstraZeneca for 300 million doses, with an option for 100 million more. The AstraZeneca vaccine is already being given to people in the UK. The EU has not yet approved its use in the bloc but is expected to do so by the beginning of February. However, the EU has already started to roll out the vaccine by Pfizer-BioNTech of which the bloc has ordered 600 million doses. Pfizer-BioNTech also said last week that they are experiencing difficulties with production and as a result, shipment will be delayed by a few weeks.

An Eventful Week for the Markets

European Commission President Ursula von der Leyen addressed the problem during her appearance in the virtual version of the annual World Economic Forum. She said that pharmaceutical companies “must honor their obligations” while adding that Europe “invested billions to help develop the world’s first Covid-19 vaccines”.

Across European countries, the Spanish economy grew by 0.4% versus the estimate for a contraction of -1.4%. Earlier today, France released their latest GDP figures. The French economy contracted by -1.3% in the fourth quarter, an indication that the economy performed better during the winter lockdown, compared to the estimation for a drop in GDP by 4.00%. German GDP arrived at 0.1% quarter-on-quarter versus the consensus of 0.00%. The annualized German GDP stands at 3.9% in the fourth quarter, beating estimations of -4.00%.

European markets today retreat amid concerns about volatile retail traders and heightened speculation in the United States. European stocks are pointing to a negative finish to the week as global stocks are painting their worst week in three months. The turmoil caused by retail investors and day traders was the highlight of this week, while concerns remain about the uneven vaccine rollout across Europe and the expected delay of the fiscal stimulus by President Biden.

US futures on Friday point to the downside ahead of the opening session. Futures tied to the Nasdaq Composite Index are down the most, indicating a lower open by over 1.00%. Dow’s future and S&P futures are also negative by about 1.00%.

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