Global stock rally tempers after vaccine euphoria
INTERNATIONAL - The global rally in stocks slowed its pace on Tuesday while haven assets found support amid concern that a promising coronavirus vaccine study still has hurdles to clear.
The Stoxx Europe 600 Index edged higher at the opening with some of Monday’s biggest gainers -- travel and energy stocks -- increasing more moderately. The gauge jumped 4 percent yesterday.
US equity futures erased earlier declines, signalling the underlying index may add to its two-month closing high reached Monday on news the coronavirus shot being developed by Pfizer and BioNTech prevented over 90 percent of infections.
Treasuries were steady as investors focused on the risks that fresh US fiscal stimulus may now be less than expected. Surging coronavirus cases and legal challenges to the US election outcome also weighed on sentiment.
After their knee-jerk reaction yesterday, investors are reappraising how much further they might switch out of havens into risk assets, and out of stay-at-home stocks and into pandemic laggards such as the travel and energy industries. While US junk-bond yields fell to a record low, investors are cautious that there are still many details to still come out about vaccine roll-outs.
“There are obvious questions about the sustainability of positive vaccine news flows – from efficacy, to scalability, to side effects, to distribution/refrigeration issue,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors.
Separate from the Pfizer trial, an antibody therapy from Eli Lilly & Co. was granted emergency-use authorization in the US. But the final-stage trial of a frontrunner Chinese vaccine candidate was halted in Brazil due to a serious adverse event. Experts cautioned questions remain to be answered before an inoculation can be rolled out.
The US surpassed 10 million Covid-19 cases on Monday and appeared poised to hit record hospitalizations later this week. President-elect Joe Biden warned the nation faced a “dark winter” and announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to contain the outbreak.
The Federal Reserve warned that asset prices in key markets could take a hit if the pandemic’s economic impact worsens in coming months.
These are some key events coming up:
- Alibaba holds its annual Singles’ Day on Wednesday, an online global shopping phenomenon that had $38 billion (R587.70 billion) of sales last year
- European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powell are among the speakers Thursday at an online ECB Forum entitled “Central Banks in a Shifting World”
- Finance ministers and central bankers from the Group of 20 hold an extraordinary meeting Friday to discuss bolder action to help poor nations struggling to repay their debts.
These are some of the main moves in markets:
- The Stoxx Europe 600 Index fell 0.1 percent as of 8:19 a.m. London time.
- Futures on the S&P 500 Index climbed 0.1 percent.
- Nasdaq 100 Index futures increased 0.2 percent.
- The MSCI Asia Pacific Index gained 0.6 percent.
- The Bloomberg Dollar Spot Index fell 0.1 percent.
- The British pound increased 0.3 percent to $1.32.
- The Japanese yen strengthened 0.4 percent to 104.99 per dollar.
- The Mexican peso weakened 0.1 percent to 20.3656 per dollar.
- The yield on 10-year Treasuries increased less than one basis point to 0.93 percent.
- The yield on 30-year Treasuries declined two basis points to 1.69 percent.
- Germany’s 10-year yield fell less than one basis point to -0.51 percent.
- Britain’s 10-year yield increased less than one basis point to 0.375 percent.
- West Texas Intermediate crude rose 0.3 percent to $40.40 a barrel.
- Gold strengthened 1.3 percent to $1,886.47 an ounce.
- LME aluminum rose 0.4 percent to $1,900.50 per metric ton.
- Iron ore increased 0.7 percent to $118.80 per metric ton.