By Geoffrey Smith
Investing.com -- AirBnB stokes the biggest IPO frenzy in 20 years, the FDA prepares to approve Pfizer’s Covid-19 drug and the EU and U.K. are heading for a messy divorce. Plus, stimulus talks appear close to breakdown despite surge in jobless claims. Here’s what you need to know in financial markets on Friday, December 11th.
1. An IPO party like it’s 1999
Anyone old enough to remember the dot.com bubble of 1999 can surely no longer overlook the similarities. Airbnb (NASDAQ:ABNB), which has never made a profit, has less than $4 billion in annual sales, and was valued at only $30 billion before the pandemic struck and changed the future of travel probably forever, was valued at over $100 billion by the end of its first day trading on the New York Stock Exchange.
Doordash (NYSE:DASH), another loss-making startup in an industry so far yet to show a meaningful profit anywhere, clung on to most of the 86% gains it made on its debut, another IPO marked by a frantic scramble for shares at any cost, largely by retail investors.
Next to that, the doubling of Chinese toymaker Pop Mart International (HK:9992) on its market debut Friday to over $14 billion seems like a footnote, especially since the company is already profitable.
2. FDA set to approve Pfizer (NYSE:PFE) drug; GSK/Sanofi setback
A U.S. Food and Drug Administration advisory panel backed the authorization of the Pfizer/BioNTech vaccine for emergency use against Covid-19, on a day when U.S. deaths from the disease topped 3,000 for the second time in a row.
The advice clears the way for formal authorization as early as today, which would allow vaccinations to start immediately. The U.K. and Canada have been vaccinating with the drug since earlier this week.
Two big European companies working on a rival drug suffered a setback, however. GlaxoSmithKline (NYSE:GSK) and Sanofi (PA:SASY) (NASDAQ:SNY) said their experimental vaccine had failed to generate an adequate immune response in the over-50s in a stage 2 trial. They intend to reengineer the product and try again, but don’t expect it to be available until the fourth quarter of 2021.
3 Stocks set to open lower; PPI, Consumer sentiment eyed
U.S. stocks are set to open lower on disappointment at the lack of progress in U.S. stimulus talks and on concern about the prospect of a messy end to the Brexit process (see 4. and 5.).
By 6:30 AM ET, Dow Jones Futures were down 242 points, or 0.8%, while S&P 500 Futures and NASDAQ Futures were down 0.9% each.
Stocks likely to be in focus later, aside from Airbnb and Doordash, include Walt Disney (NYSE:DIS), whose CEO issued an aggressive forecast for subscriber growth at its streaming channel over the next few years, and Ferrari NV (NYSE:RACE), whose CEO unexpectedly resigned overnight, citing personal reasons.
The day's data calendar is headed by the release of November producer prices at 8:30 AM ET and the University of Michigan's consumer sentiment survey at 10 AM.
4. EU one for two on deals - yes to budget, no to Brexit
There will probably be no free trade agreement in place between the U.K. and EU when the post-Brexit transition agreement lapses at the end of the month, European Commissioner Ursula von der Leyen told reporters after an EU summit that dragged into the small hours of Friday.
U.K. Prime Minister Boris Johnson also warned that a deal was unlikely, after the EU inserted last-minute demands aimed at ensuring the U.K. doesn’t deviate from its regulatory standards in future. The pound, which rose above $1.35 for the first time in 2 ½ years last week on hopes of a deal, fell back below $1.3200.
The EU leaders had more success in unblocking a deadlock over their multi-year budget and the 750 billion-euro Recovery Fund, which will be financed by the first-ever large-scale issuance of jointly guaranteed EU debt. The euro edged down 0.2% to $1.2117 by 6:30 AM ET (1130 GMT).
5 Stimulus talks close to breakdown
Hopes on a fiscal relief package for the U.S. economy are receding after Senate Republicans dug in their heels over the issue of liability protections for businesses, schools and other entities.
The Wall Street Journal reported that aides to Senate Majority Leader Mitch McConnell “see no possible path forward” for the $908 billion package crafted by a bipartisan group of lawmakers, due to its failure to address this issue.
Progress on the stimulus package is also being held up by a familiar piece of political theater over extending the government’s funding, which is due to expire on Saturday. A stopgap spending bill designed to cover the next week’s business was postponed on Thursday.
The sharp rise in initial jobless claims last week, to a three-month high of over 850,000 , appears to have little success in concentrating lawmakers’ minds.