FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
ETX Capital information and reviews
ETX Capital
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%
EUR/USD
1.1762
BTC/USD
47 554.25
GBP/USD
1.3784
USD/JPY
109.7980
USD/CHF
0.9279
USD/CAD
1.2687
EUR/JPY
129.1441

Global equities take a breather following massive vaccine-related moves


12 November 2020

Pfizer and BioNTech’s announcement on Monday that their Covid-19 vaccine was more than 90% effective in preventing the virus has led to big market moves so far this week. While the rally in global equities is remarkable, that isn’t what has captured my interest. It is the big selloff in FANG+ internet platform stocks and the reallocation of funds into economic sensitive sectors that has been more fascinating. The NYSE FANG+ index declined 3.2% on Monday and fell by another 2.5% on Tuesday. Meanwhile, Banks, Travel and Energy stocks have all seen double digit gains over the first two days of the week.

Long term bond yields in the US and most other developed nations have risen by more than 10 basis points, which also supports the move into cyclical stocks and the selling of industries that have benefited the most from the pandemic.

However, this trend seems to have reversed on Wednesday with Tech companies contributing the most to the 0.76% gains in the S&P 500, while Basic Materials, Energy and Financial stocks all closed in negative territory.  

The vaccine-related rotation has quickly faded as investors have realised that the pandemic won’t disappear as fast as it arrived. While the vaccine remains the best news received since the virus spread, life won’t return to normal in a matter of days or weeks. It largely depends on when a widespread vaccination campaign becomes available and how fast economic activity returns to pre-pandemic levels. Lockdowns and social restrictions remain in place for many nations through the winter season, particularly in Europe, and so we will continue to rely on stay-at-home companies for some time.

If the second wave hitting Europe and third wave in the US isn’t as dangerous as the first one, we may still see adjustments in investor’s portfolios by reducing Tech exposure and tilting towards economic sensitive stocks. But this won’t be in a straight line, and won’t necessarily lead to another a more prolonged selloff in Tech. After all, Covid-19 may have already started major structural changes in the way we do business and many of those differences may prove to be permanent.

A risk that is being totally ignored at the moment is a US constitutional crisis. You only have to look at President Trump’s Twitter account to see what I mean. The lame duck President continues to reject the outcome of the election and doesn’t seem willing to concede or stand down. However, with no evidence thus far of his claim of illegitimate votes, the markets are ignoring his tweets and actions. If Trump’s legal attacks result in a delay of certifying the election results, then we may see this tail risk priced into equities and other asset classes.

#source

Related

Energy is the play: how we get to $100 crude
Energy is the play: how we get to $100 crude

Natural gas futures in Europe and the UK are flying, while our natural gas (NG) CFD (the underlying is traded on the NYMEX) pushed over $5.60 and into 7-year highs...

16 Sep 2021

Are investors sleeping on systematic risk in China?
Are investors sleeping on systematic risk in China?

It’s time to talk about China. The situation is getting dicier as the nation’s second-largest property developer - Evergrande - is on the verge of default. Trading in the company...

16 Sep 2021

Sentiment sours as the S&P 500 tests key support
Sentiment sours as the S&P 500 tests key support

We head to quadruple witching in the US on Friday and notably options expiration (OPEX), and the weakness we see time and again in the week before seems...

15 Sep 2021

Dollar unscathed by soft inflation, equities resume slide
Dollar unscathed by soft inflation, equities resume slide

Dollar takes little damage despite signs US inflation has peaked - Wall Street resumes selloff - all eyes on China contagion risks - Canadian data coming up ahead of elections, gold wakes up...

15 Sep 2021

US inflation under the microscope
US inflation under the microscope

With the Fed having almost locked in a November taper announcement, the question now is whether Chairman Powell will use next week’s policy meeting to give the markets...

14 Sep 2021

Wall Street loses altitude. Dollar grinds higher
Wall Street loses altitude. Dollar grinds higher

The relentless rally in US stock markets took a breather last week. Wall Street suffered a rare pullback as investors took some profits off the table, positioning...

13 Sep 2021


Forex Forecasts

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.