Shares surge again as COVID vaccine cheer builds on Biden bounce

Intermediate

Macroeconomic/ geopolitical developments

  • The announcement last Monday from Pfizer that their COVID-19 vaccine had produced extremely positive trial results and is at a late stage of development saw the “risk on” theme reinforced.
Pfizer vaccine
  • Value and “old economy” stocks surged higher on anticipation of a broad economic recovery, whilst “new era” tech stocks underperformed.
  • This was on the back of the announcement last weekend that Joe Biden will be the next US President, which had already seen riskier assets rallying and safe haven assets selling off.
  • With the Republicans still likely to hold the Senate, a probable mixed government is seen as positive for corporates, therefore stock indices.
  • There remains an ongoing and significant threat of a difficult transition with the Trump administration staging legal fights against the election result, slowing the transition not the Democrats.  
  • The second wave of COVID-19 continues across Europe, but with new lockdown measures kicking in as the number of cases in some instances is plateauing or the growth slowing across the continent.
  • In contrast, COVID-19 cases are surging across all states in the US.
  • Market concerns that national and global economic recoveries will be damaged, however, seemed to be already priced in.
  • The EU and UK have made some progress in their ongoing trade talks.
  • The Reserve Bank of New Zealand were less dovish, de facto more hawkish in the assessment of their economy this week, with a move to negative interest rates now far less likely.

Global financial market developments

DJIA chart
  • This echoed the rotation into value and recovery stocks, out of the high flying, momentum stocks and tech sector.
  • The “risk on” tone saw “risk currencies” higher again with the Australian, New Zealand and Canadian Dollars all strengthening initially, before correcting back lower.
  • The Japanese Yen was the bus casualty in the Forex space, as the move to “risk on” saw the USDJPY surge, with the Yen crosses higher across the FX board.
  • EURUSD has been erratic, slightly negative, whilst GBPUSD rallied with hopes of the EU-UK trade deal.
  • In the commodity space, Copper and Oil were erratic but mostly higher with the wider “risk on” theme, though Gold reacted as a traditional safe haven play and plunged lower.

Key this week

  • Geopolitics:
    • Watching out for further vaccine announcements from Pfizer or other sources
    • COVID-19 cases, hospitalisations and deaths in focus in Europe and the US
    • The transition of Presidential power in the US will still be key to watch this week
  • Central Bank Watch: A quiet week for Central Banks
    • We get the Reserve Bank of Australia (RBA) meeting minutes Tuesday
    • The People’s Bank of China (PBoC) interest rate decision is due on Friday
    • There are also numerous speeches by Central Banks governors and committee member throughout the week.
  • Macroeconomic data: Another relatively quiet week on the data front.
    • We get various national inflation and Retail Sales numbers released throughout the week
    • Japanese GDP on Monday and the Australian employment report on Thursday.
DateKey Macroeconomic Events
16/11/20Japanese GDP; Chinese Retail Sales
17/11/20RBA meeting minutes; US Retail Sales
18/11/20UK, Eurozone and Canadian inflation data including CPI
19/11/20Australian employment report; US Jobless Claims
20/11/20PBoC interest rate decision; UK and Canadian Retail Sales

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

Comment on this video

Your email address will not be published. Required fields are marked *


Latest Related News

Euro and Pound bull breakouts (EURUSD and GBPUSD forecasts)

The US Dollar stays weak in the ongoing “risk on” environment.“Risk on” is being driven byVaccine hopesBiden bounceImproving global dataThe Euro has pushed to a new multi-month peak versus the US Dollar (EURUSD forecast)The Pound is looking at progress at the EU-UK trade talks for further upside gains against the USD (GBPUSD forecast) EURUSD day trade outlook: Surge above key 1.2011 peak A surging advance… Continued

Markets keep the party going, despite surging US COVID-19 cases

Macroeconomic/ geopolitical developments A fairly quiet week on the macroeconomic and geopolitical front, with the holiday shortened session in the US on Thursday and Friday because of Thanksgiving.The main development was on the US political side, as the Presidential transition of power has started properly, and although the Trump administration continues dispute the election result, they have allowed Biden’s team to start the transition. Also,… Continued

US Dollar stays weak as AUDUSD and USDCAD approach key levels

Dollar Index reaches final major support (DXY forecast)Euro breaks up (EURUSD forecast)Pound posts negative (GBPUSD forecast)Aussie reaches major monthly resistance (AUDUSD forecast)Dollar-CAD approaches its major support zone (USDCAD forecast) Continued

Stocks stay very bullish into Thanksgiving – S&P 500 and FTSE 100 forecast

A firm tone seen for the main global stock indices this week, throughout November and also over the past 24 hours.The solid “risk on” theme is still been driven by:The ongoing Biden bounce, reinforced by the start of the transition of powerThe appointment of Janet Yellen as US Treasury SecretaryThe announcement of THREE very positive COVID-19 vaccine trial resultsLockdowns in Europe starting to work, with… Continued

Euro and Pound stay bullish – EURUSD and GBPUSD forecasts

A weaker US Dollar still the dominant Forex markets theme with the ongoing “risk on” environment.“Risk on” is being driven by the start of the US Presidency transition of power, the appointment of Janet Yellen as US Treasury Secretary, plus from the three vaccine announcements in November.The Euro has pushed above 1.1900 and resumed the positive tone seen earlier November, aiming EURUSD into month-end and… Continued

Forex Brokers in your location


SIGN UP

72% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

74-89% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

75% of retail investor accounts lose money when trading CFDs with this provider.


SIGN UP

76.4% of retail investor accounts lose money when trading CFDs with this provider.