GLOBAL NEWS:
U.S. President Donald Trump’s administration awarded a contract worth up to $812 million for a new U.S. company to manufacture drugs and drug ingredients to fight COVID-19 on American soil, aiming to end dependence on other countries. The administration has been looking to build up the ability to produce drugs and their raw materials in the United States after the global pandemic exposed the industry’s dependence on China and India for its supply chain. The U.S Department of Health and Human Services said it had awarded a four-year, $354 million contract to privately-held Phlow Corp to make COVID-19 drugs, other essential drugs and their ingredients. The contract - which is for generic drugs, not more complicated products like vaccines - can be extended to a total of $812 million over 10 years. The company is run by Eric Edwards, who previously founded the drug company Kaleo Pharmaceuticals with his twin brother. He said in an interview that Phlow initially reached out to the U.S. health department last November, to tell them that they were working to build U.S. drug manufacturing capacity. After COVID-19 hit, Edwards said Phlow focused on drugs for the virus and reached out to Navarro’s office and government agencies. Phlow has already started making pharmaceutical ingredients and finished dosage forms for over a dozen medicines to treat hospitalized patients with COVID-19-related illnesses, including medicines for pain management, sedation for ventilators, blood pressure support for critical patients and antibiotics.It has partnered with generic drug manufacturer Civica Rx, chemical company Ampac Fine Chemicals and Virginia Commonwealth University’s Medicines for All Institute.
China held its benchmark lending rate steady on Wednesday, though analysts believe the widely expected decision signals just a brief pause in the central bank’s efforts to support an economy ravaged by the coronavirus pandemic. The one-year loan prime rate remained at 3.85% from last month’s fixing, while the five-year was also kept at 4.65%. A Reuters survey of traders and analysts showed more than 70% of them expected China would stand pat on the benchmark lending rate in May.Markets usually take the People’s Bank of China’s stance on its medium-term lending facility rate - which serves as a guide for the LPR - as an indicator for any adjustment to the lending benchmark. Jacqueline Rong, senior China economist at BNP Paribas in Beijing, said the steady LPR does not mean the PBOC won’t deliver additional rate cuts or reduce banks’ reserve requirement ratio in June. Gross domestic product shrank 6.8% in the first quarter year-on-year, the worst quarterly contraction on record, as the pandemic and tough containment measures paralyzed activity across the country.
The slump in Japanese business confidence deepened in May, hitting decade lows as firms braced for a protracted period of coronavirus-driven economic weakness, the Reuters Tankan survey showed on Wednesday. The downbeat findings came after data this week showed the world’s third-largest economy slipped into its first recession in 4-1/2 years last quarter, as the broadening impact of the highly contagious virus depressed business and consumer activity at home and abroad. The sentiment index at manufacturers slumped to minus 44 in May from minus 30 in the previous month, the lowest since June 2009, while the service-sector gauge plunged to minus 36 from minus 23, according to the Reuters Tankan poll, the worst reading since December 2009. A negative figure means pessimists outnumber optimists. The survey showed both manufacturers and service-sector firms expected to see an even sharper fall in business sentiment in the three months ahead, at minus 51 and minus 48 in August, respectively.Prime Minister Shinzo Abe has pledged a second supplementary budget later this month, on top of the recently announced record $1.1 trillion stimulus package, to help business and households tide over the pandemic’s impact. The depth of despair in the business sector reinforces analysts’ expectations that Japan is on course for its worst postwar economic slump, with a Reuters poll forecasting an annualised GDP decline of 22% in the current quarter.
Indian shares rose on Wednesday, helped by gains in beaten-down banking stocks and ITC, even as domestic coronavirus cases continued to rise unabated, dampening the growth outlook for Asia’s third-largest economy. Despite the gains, the Nifty continued to trade below the 9,000 level, which it breached on Monday after India’s economic relief measures to support an already slowing economy hit by the pandemic disappointed markets. The Nifty was up 0.72% at 8,943.20 by 0400 GMT, while the Sensex was up 0.76% at 30,434.46. HDFC Bank Ltd and mortgage lender HDFC Ltd, up more than 1% each, were the two biggest boosts to the Nifty 50. Consumer products giant ITC Ltd rose 3.3%. Coronavirus infections in India reached 106,750 as of Wednesday, a jump of more than 5,600 from the day before, with deaths crossing 3,300.
Gold prices gained on Wednesday as bleak data from major economies reflected the fallout from the coronavirus crisis, while the initial euphoria over a potential COVID-19 vaccine fizzled and gave way to safe-haven demand. Spot gold was up 0.2% to $1,747.19 per ounce, as of 0256 GMT. U.S. gold futures rose 0.4% to $1,753.30. In testimony before the U.S. Senate Banking Committee, Federal Reserve Chair Jerome Powell said the Fed was looking at extending access to the credit facilities to additional borrowers, including states with smaller populations. Markets now await the Federal Open Market Committee’s April 28-29 policy meeting minutes due at 1800 GMT. U.S. homebuilding dropped by the most on record in April, lifting fears the pandemic would lead to the deepest economic contraction in the second quarter since the Great Depression. The optimism from early data for a vaccine faltered after a medical news website reported it was insufficient, causing U.S. equities to fall and putting Asian stocks under pressure. Elsewhere, palladium fell 0.8% to $2,043.63 per ounce and silver eased 0.5% to $17.49, while platinum rose 0.2% to $834.05.
Oil prices rose on Wednesday amid signs of improving demand and a drawdown in U.S. crude inventories but worries over the economic fallout from the coronavirus pandemic capped gains. Brent crude futures for July delivery LCoc1 were up 23 cents, or 0.7%, at $34.88 per barrel at 0347 GMT. U.S. West Texas Intermediate crude futures for July CLc1 were up 14 cents, or 0.4%, at $32.10 a barrel. The July contract closed on Tuesday at $31.96, up 1%. The June contract expired on Tuesday at $32.50 a barrel, up 2.1%, as the WTI futures market avoided the chaos of last month’s May expiry, when prices sank below zero. Oil prices have mainly risen during the past three weeks, with both benchmarks climbing above $30 for the first time in more than a month on Monday, supported by massive output cuts by major oil producing countries and signs of improving demand. U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from industry group the American Petroleum Institute showed on Tuesday. Refinery runs rose by 229,000 barrels per day, the API said, a sign that plants are trying to produce more fuel as the United States eases its lockdowns put in place to halt the spread of the novel coronavirus.