Confident BoE helps drive FTSE outperformance

UK stocks have managed to stave off any of the losses seen on mainland Europe, with a positive assessment from the Bank of England highlighting a strong 2021. US jobless claims continue to fall, raising expectations of another strong jobs report tomorrow. Meanwhile, pharmaceutical stocks have lagged, with plans to remove vaccine patents sparking downside for the likes of BoiNTech, Moderna, and Pfizer. 

• Optimistic BoE helps lift FTSE 
• US jobless claims raise confidence for tomorrows jobs report
• Vaccine stocks hit hard as Biden plans to revote patents

The FTSE 350 has outperformed its mainland European counterparts today, with a bullish Bank of England helping to lift sentiment around the UK economic outlook. The Bank of England meeting gave plenty of grounds for optimism, with the bank raising forecasts to predict the best year of growth since the second world war. The dramatic upgrade in growth forecasts saw the bank predict a rate of 7.25% over the course of 2021; up from the February outlook for 5%. With BoE member Haldane calling for a reduction in the asset purchase scheme, there is no doubt that the successful vaccination programme has helped to stifle any fears over a third wave in the UK. Notably, we also saw another downward revision to the unemployment forecast for the year, highlighting the impact felt by Rishi Sunak’s extended furlough scheme. From a monetary standpoint, traders will be keeping a close eye on inflation levels, with increased UK-EU trade friction adding further price pressures in a year that is already expected to bring a sharp rise in inflation.

Jobless claims fell below the 500k threshold for the time last week, bringing increased confidence that the US economic recovery is continuing apace as we head towards tomorrows jobs report. Questions around whether last month’s blockbuster payrolls release was driven by Joe Biden’s $1.9 trillion coronavirus support package will be answered tomorrow as payrolls head towards the one-million mark. The fact that we continue to see jobless claims fall each week does bolster claims that we will see another improved NFP figure tomorrow afternoon.

Vaccine-making pharmaceutical firms have been hit hard in the wake of Joe Biden’s decision to back plans to revoke patents on current vaccine formulas. A 17% decline in BioNTech shares served to highlight the threat posed to the likes of Moderna and Pfizer, which have both subsequently taken a hit after the US open. For Moderna shareholders, this could not have come at a worse time, with the company losing 8% despite announcing their first profitable quarter on record. With Moderna turning a $124m Q1 2020 loss into a $1.26bn profit a year later, the prospective plan to strip firms of their intellectual property comes as a blow for shareholders. Nonetheless, the inability to keep up with demand does highlight the need to find solutions to vaccinate the world, with any means to ramp up production bringing positive consequences on a human and economic level.