Powerscourt Coronavirus Briefing – 09 September 2020

It is a bad news morning with bad vaccine news, a US tech sell-off and a UK government ready to ban most social gatherings of more than six people.

A join enterprise between AstraZeneca and Oxford University, known as the Oxford Vaccine, had appeared to be ahead in the headlong race to find a vaccine before a patient in the UK became severely ill after being injected. The vast stage 2 and 3 trials which were underway in the UK, US, Brazil and South Africa have been halted and AstraZeneca says it is reviewing safety data. The patient is expected to recover and it is not certain that the illness is linked to the trial. Such temporary “holds” are not uncommon but this is a vaccine race like no other. As an example, the US government has invested $11 billion in its Operation Warp Speed to find a solution fast.

The good news is that there are a further 11 vaccines in late stage trials.

Meanwhile a continued sharp rise in UK coronavirus figures is starting to alarm the government.

Not just for the obvious reasons, but because of the worrying suspicion that some of the drives they have recently undertaken to stimulate the UK economy may have fuelled a resurgence of the virus. If this turns out to be the case, it would leave a huge policy conundrum for an economy which is underpinned by consumption.

The latest test data reported nearly 3,000 coronavirus cases on both Sunday and Monday, and 2,420 on Tuesday. The Financial Times points out that the known average incubation period for the virus implies that many of the newly confirmed infections will have been triggered by social activity at the Bank Holiday Weekend, when consumers were taking maximum advantage of the wildly popular Eat Out to Help Out scheme.

While the government is expected to play down the suggestion that its drive to encourage people back to their workplaces and schools and to get them socialising again is behind the recent surge, attributing it more to private mixing of households, it’s difficult to dismiss the possibility of a correlation. The implications for the UK’s battered economy are worrying.

The immediate output of the UK’s rising caseload is that Prime Minister Boris Johnson is today expected to ban gatherings of more than six people from Monday onwards if they are for fun as opposed to work. Some tougher restrictions will be imposed in certain areas of the UK where the prevalence is highest, particularly in the North.

The resurgence is being overwhelmingly fuelled by young people, data suggests, with 25% of new cases being detected in people aged 15-29.

Across Europe, authorities are scrabbling to put the lid back on a social abandon that has characterised the behaviour of many young people over the summer after the months of lockdown.

Young people are being reminded of the need to consider that while their chances of being damaged by the virus are low, they are a hugely effective vector to bring the infection to vulnerable older people.

Spain, which has had one of the sharpest resurgences across Europe, has launched a media campaign, called #EstoNoEsUnJuego (#ThisIsNotAGAme) calling on young people to consider their responsibilities to society. It features a black-and-white video showing young people drinking in the street then cutting to images of people in hospital – including an older woman being treated by a medic in full PPE – and finally to images of people in coffins.

Tech stocks, which soared as investors saw the pandemic accelerating the conversion to a digital world, continued to fall yesterday with the Nasdaq 100 now 11% down in the last three days’ trading. Tesla has fallen 34% in September while Apple, the world’s most valuable business, is down 14% in three days.

The news on the Oxford Vaccine trial halt, along with a continued sell-off of technology stocks, helped drag Asian shares lower into Wednesday with Europe expected to open lower too.

WHAT ARE COMPANIES SAYING?