Global Markets: Vaccine euphoria keeps stocks cruising higher
10/11/2020 13:03
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Nov 10 (Reuters) - Stock markets and commodities
continued to push higher on Tuesday, after the euphoria of a
coronavirus vaccine had sent global equity indexes soaring to an
all-time high and halted the bond rally.
Having surged 4% on Monday on the vaccine breakthrough from
U.S. and German drugmakers Pfizer PFE.N and BioNTech 22UAy.F
there was a drop in the pace in Europe, though things were still
shuffling forward. .EU
The pan-European STOXX 600 .STOXX was up another 0.4%,
taking November's rally past 13% and though Wall Street looked
set for a slow start, there was a further 2.7% rally in European
banks .SX7P as worries about mass loan defaults and even more
negative interest rates continued to ease. .EU
"We have some consolidation in markets but I don't think
it's surprising given the size of the moves yesterday," said JP
Morgan Asset Management's Hugh Gimber.
"The news we had was clearly a big step forward... it's a
big piece of the jigsaw to getting the global economy back on
its feet."
Asian markets had been playing catch-up overnight, having
been closed when Monday's news of the vaccine broke, although
like Wall Street overnight, they lost momentum by the end of the
session.
Particularly encouraging was that the vaccine's trials had
shown it to be more than 90% effective in preventing infection,
much higher than expected. urn:newsml:reuters.com:*:nL1N2HV067
Japan's Nikkei 225 .N225 ended up nearly 0.3% after being
1.1% higher in early trading which set a new 29-year high.
Australia's S&P/ASX 200 .AXJO closed 0.7% higher after
trading up as much as 1.6%, Hong Kong's Hang Seng .HSI ended
up 1.1% and Singapore .STI , the Philippines .PSI and
Thailand .SETI gained 5.2%, 4.1% and 3.4% respectively.
World airline stocks .dMIWO0AL00PUS , which have been among
the hardest hit by the pandemic, soared over 8%.
.dMIWO0AL00PUS
There was weakness in China, though, with the CSI300 Index
.CSI300 slipping 0.6%. .SS
Analysts attributed the decline to the heavy exposure of
China's indices to tech stocks, which came under pressure as
investors bet on less consumer reliance on technology if a
vaccine leads to an easing of movement restrictions.
U.S. tech had suffered on Monday too, Deutsche Bank's Jim
Reid pointed out. The Nasdaq dropped 1.5%, COVID-19's video chat
poster child Zoom fell 17% and sit-on-your-sofa winner Netflix
slumped 8.6%. .N The Nasdaq was also set to open lower again
later. .N
"It was like a big piece of elastic," JPMorgan's Gimber said
about moves of COVID-19 winners and losers. "The further you
stretch it the sharper it reverts, and the news of the vaccine
was the catalyst for that reversion yesterday."
GAME CHANGER
The vaccine optimism was shared across all major asset
classes. Oil prices were edging higher again in London trading
after posting the biggest one-day percentage gain in five months
on Monday.
The overnight rise had prompted some traders to take profit.
In contrast to Pfizer and BioNTech's news, Brazil's health
regulator suspended trials for China's Sinovac vaccine after
adverse side effects had emerged. urn:newsml:reuters.com:*:nS0N29X02I
While stocks have also rallied on the assumption that
Democrat Joe Biden would be the next U.S. president, the top
Republican in U.S. Congress on Monday did not acknowledge Biden
as president-elect, raising concerns about a rough transition of
power.
"No surprises but it's essentially a rotation ... what was
bought in the last eight months is now being sold and what was
sold is being bought," Citigroup global markets director
Elizabeth Tian said.
Early on Tuesday, Japan's Prime Minister Yoshihide Suga had
instructed his cabinet to design a fresh stimulus package as
well. urn:newsml:reuters.com:*:nT9N2HD01E.
In the currency markets, the yen JPY= strengthened as much
0.4% to 104.96 per dollar, while sterling GBP= was last
trading at $1.3230, up 0.5% on the day.
The risk-sensitive Australian dollar AUD= edged up 0.1%
versus the greenback at $0.7279, while Turkey's lira TRY= gave
back nearly 2% of the 5.7% surge it saw on Monday after the
country's top economic chiefs were replaced.
The vaccine news had also sent long-dated U.S. Treasury
yields skyrocketing on Monday in their biggest one-day jump
since March. The yield curve, an indication of risk appetite,
hit its steepest level since March. urn:newsml:reuters.com:*:nL1N2HV1RU
Bonds had their biggest selloff since recoiling from March
peaks. The yield on benchmark 10-year U.S. government debt
US10YT=RR , which rises when prices fall, jumped 10.3 basis
points on Monday and held above 0.9% on Tuesday at 0.9099%.
In Europe, German Bund yields were near their highest in a
month too, GVD/EUR and Brent oil futures LCOc1 rose 9 cents,
or 0.2%, to $42.49 after their 8% vault the previous session.
O/R
"OPEC+ will now feel confident that a solution is actually
on the horizon which will cure the oil markets current demand
problem. It is not a pie in the sky, it is real and the solution
is on its way," said Bjarne Schieldrop, chief commodities
analyst at SEB.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
Stocks hit new highs https://tmsnrt.rs/38vx2mG
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(Reporting by Scott Murdoch in Hong Kong and Lawrence
Delevingne in Boston; Editing by Richard Pullin, Ed Osmond and
Bernadette Baum)
((lawrence.delevingne@tr.com))