The race for a vaccine heats up

Your level-headed briefing on how the coronavirus epidemic is affecting the markets, global business, our workplaces and daily lives, with expert input from our reporters and specialists across the globe.

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Latest news

• Gulf Arab states are expected to increase borrowing by a record $100bn this year as fiscal deficits widen on lower oil prices and the impact of coronavirus

• Florida reported a daily increase of more than 10,000 coronavirus cases for the sixth consecutive day and more than 90 new deaths

• Gold prices hit their highest level since September 11 and silver hit a four-year peak as investors searched for safe havens

Vaccine race intensifies

“Vaccines, once considered a neglected Cinderella industry, have never been so hot,” notes today’s Lex column, as investors pore over the latest interventions from governments and news of scientific trials.

The UK said this morning it had struck deals to secure 90m doses of potential vaccines from Europe, including the first supplies of a new candidate from Germany’s BioNTech and Pfizer of the US, and a separate vaccine from Valneva of France. It has already agreed to buy 100m doses of a vaccine developed by AstraZeneca and Oxford university that today was revealed to have shown promise in early trials.  

Meanwhile, GlaxoSmithKline announced it had bought a 10 per cent stake in Germany’s CureVac, an important player in the vaccine race. CureVac reportedly attracted the interest of the White House in March after German media said a company executive — now departed — met US president Donald Trump, raising fears that the US would attempt to monopolise the company’s supplies.

Political fears around “vaccine nationalism” were also underlined in an FT interview with the head of Russia’s sovereign wealth fund. Kirill Dmitriev said Russia and a handful of other leading powers would develop viable Covid-19 vaccines in the new year. 

The urgency to find a vaccine is also driving some ingenious approaches. We report today on one such project involving Exyte, a German engineering group. It has developed modular manufacturing facilities that can be transported on the back of a truck and assembled “like Lego”.

But despite the scramble from governments to secure supplies, making money from vaccines is notoriously difficult, says Lex, thanks to the high risk of failure, heavy sunk costs and uncertain markets. It advises investors to hedge their bets: with so many potential Covid-19 vaccines in development — there are currently 23 in clinical trials and more than a hundred in earlier stages of development — many will inevitably lose out.

Markets

Halliburton, one of the world’s biggest oilfield services providers, became the latest company to show the effects of the pandemic-induced collapse in oil demand as it announced a writedown of $2.1bn and a net loss of $1.7bn in the second quarter. Chevron agreed to buy Noble Energy for $13bn in the oil and gas industry’s first big deal since crude prices were hit.

Investors no longer fear the collapse of markets but they are not yet convinced an economic recovery is under way, writes Camilla Hodgson. A toxic trio of unsettling events — the pandemic, the US earnings season and the US presidential election — are all acting as a cap on the S&P 500, the benchmark US index.

The approach taken by the People’s Bank of China to the pandemic is often portrayed as reactive and bureaucratic. But Ed Cole, an investment strategist at Man GLG, argues it compares favourably to that of western central banks such as the US Federal Reserve. It could mean China’s economy recovering faster and with less economic damage than large parts of the west, he writes.

Business

Manufacturing trade group Make UK warned of a “jobs bloodbath” as their members lose faith in an early return to anything resembling normality. The government’s furlough scheme is supporting more than 9m workers but this starts to wind down from next month before halting at the end of October. British companies slashed dividends by 22 per cent in the last quarter, hitting investment returns and spooking portfolio managers.

US west coast editor Richard Waters reports on the companies that are benefiting from the booming world of cloud computing during the pandemic, including the surge in videoconferencing, ecommerce and online entertainment.

US consumer industries correspondent Alistair Gray talks to Levi Strauss boss Chip Bergh about how the company has been affected by the pandemic and is finding opportunities amid the turmoil.

Global economy

EU leaders are still trying to reach agreement on the bloc’s coronavirus rescue package. They have been locked in talks since Friday morning over the fund and the EU’s €1tn seven-year budget. Investors at least were optimistic: the euro hit a four-month high against the dollar earlier today.

The double hit of the economic downturn and extra health spending caused by the pandemic has created huge budget deficits for developing countries, writes emerging markets reporter Jonathan Wheatley. Economies dependent on tourism and big commodity producers are particularly vulnerable. Support for suspending the debts of the world’s poorest countries has fallen far short of what was expected.

Meanwhile, tax rises are needed to fill the UK’s fiscal hole and provide new funds for public services, the FT Editorial Board argues. Faced with the lingering effects of the financial crisis, Brexit and now the pandemic, taxes need to increase by a few percentage points of national income to bring Britain more into line with continental Europe, it said.

Get in touch

How is your workplace dealing with the pandemic? And what do you think business and markets — and our daily lives — will look like after lockdown? Please tell us by emailing covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks

Readers respond

Bloke from North London comments on How is the virtual recruitment experiment going?

I think too much emphasis is placed on Zoom / video conferencing and not enough on the simple phone call for quick, effective one-to-ones or small team catch-ups where you can quickly dial people in without the palaver of scheduling. It’s simply a question of the right communications tool for the job.

The essentials

Africa editor David Pilling has written today’s Big Read on how the continent is bracing for a surge in Covid-19 cases. Previous hopes that the continent would be spared from the worst of the pandemic because of its young population have been dashed. The WHO says cases in 22 of the continent’s 54 countries have more than doubled in a month.

Business schools are adapting to meet demand for skills required for the post-coronavirus world such as crisis management as well as addressing the interest in sectors brought to the fore by the pandemic like life sciences and healthcare management.

Management editor Andrew Hill examines the burden that shop workers face enforcing the wearing of masks. In the US, retail giant Walmart has introduced “health ambassadors” to remind customers of the requirement to wear face coverings. Marks and Spencer today became the latest UK retailer to cut jobs, with 950 positions to go in stores and among support staff.

Final thought

Gyms may soon be reopening, for readers in England at least, but if you’re still a bit nervous about collective huffing and puffing try some of our exercise at home suggestions, from body-weight workouts to the best indoor cycling apps.