Market Commentary - November 17, 2020
Moderna outshines Pfizer delivering an experimental COVID-19 vaccine with a 94.5% efficacy from late-stage trials. Not only does Pfizer-BioNTech’s vaccine underperform in terms of effectiveness, distribution is complicated as their shots must be transported at -75 degrees Celsius with a 5-day shelf-life. In contrast, Morderna’s alternative can be shipped at -20 degrees Celsius with a 30-day lifespan. As headlines broke consecutive daily records settling at all-time highs. Nasdaq though, continues to underperform medium-term but nonetheless shrugged off cyclical rotational woes ending up for the day. News that Tesla will join the S&P 500 index on Dec. 21 further buoyed tech stocks.
Likewise, amid consecutive weeks of vaccine breakthroughs, European investors cheered the STOXX 50, CAC 40 and IBEX 35 to an 8-month high whilst the FTSE and DAX underperformed, weighed by on-going Brexit tensions. Thus far, investors have been pricing a faster pace in economic revival despite actual vaccine deployment still a long way away.
Mixed results in Asia as Australia drifts higher in anticipation of the RBA releasing monetary policy meeting minutes. Japan retreated intra-day following a meteoric rise since the start of November. Meanwhile, Hong Kong loses ground as China’s sweeping crackdown in financial markets and political arenas begin to ripple throughout.
Figure 1 (Source: IS Prime): Bitcoin Weekly Chart : Bitcoin bull market continues as investors speculate where the cryptocurrency will eventually end up.
Among majors, the U.S. dollar continues to slip with riskier counterparts Aussie and Kiwi outperforming the Euro and Pound. In focus today, China sets the yuan’s midpoint to a 29-month high amid escalating tensions between Beijing and the out-going White House administration. As Mexico completes a 6.6bn debt refinancing deal, with the offer oversubscribed more than four-times and drawing 300 institutional investors, the peso closed at an 8-month high.
Bitcoin surges another $400 to $16,600, eyeing all-time highs made in 2017 following a spate of public endorsements from prominent hedge funds and public companies. Most recently a Citibank Executive made the wide bitcoin could peak at $318,000 though improbably as it may sound. Elsewhere, gold remains unchanged and crude rises on better global economic prospects.
Headliner to Review
- Clarida, vice chairman of the Federal Reserve, said that the successful testing of two new crown vaccines in the United States has increased the chances of a faster recovery of the US economy. He pointed out that when the economy enters the fourth quarter, the momentum is very stable.
- The Reserve Bank of Australia (RBA) minutes reiterate that there will be no negative interest rates, showing readiness for further stimulus. The central bank is ready to provide more policy stimulus after cutting rates to record low.
- NY Empire State Manufacturing Index dropped from 10.5 to 6.3, which was much worse than the forecast of 13.8.
Headliner to Watch
- OPEC members and other oil rich nations will meet today to discuss future outputs. Previously given the resurgence in coronavirus, analyst expected participants to delay increasing production for another month. However recent vaccine announcement may weigh on this decision.
- US retail sales expected to stay positive but decline from 1.9% to 0.5%. The following month will see US States imposing new rounds of piecemeal restrictions on businesses, schools and other forms of social gathering, of which is will curtail future retail growth.
- RBA Governor Lowe will speak in a virtual panel to discuss Australia’s recovery effort amid COVID tomorrow.
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Topics: Market Commentary