Vaccine euphoria keeps stocks cruising higher
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[November 10, 2020]
By Marc Jones
LONDON (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 shaken bond yields higher.
Having surged 4% on Monday on the vaccine breakthrough from U.S. and
German drugmakers Pfizer and BioNTech there was little surprise that
Europe saw the pace drop, though things were still moving forward. [.EU]
Pan-European STOXX 600 was up another 0.5% taking November's rally past
13% and there was another 2.7% rally in bank stocks 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 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."
![](http://archives.lincolndailynews.com/2020/Nov/10/images/ads/current/topflight_sda_TIP_2020.png)
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 had 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 and, for example, current flu vaccines.
Japan's Nikkei 225 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 closed 0.7% higher after trading up as much as
1.6%, Hong Kong's Hang Seng ended up 1.1% and Singapore, the Philippines
and Thailand gained 5.2%, 4.1% and 3.4% respectively.
World airline stocks, which have been among the hardest hit by the
coronavirus halting of travel, soared over 8%.
There was weakness in China, though, with the CSI300 Index 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 eyed 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's video chat poster child Zoom fell
17% and sit-on-your-sofa winner Netflix slumped 8.6%. [.N]
"It was like a big piece of elastic," JPMorgan's Gimber said about moves
of COVID 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 asset classes. Oil prices
were edging higher again in London trading after posting the biggest
one-day percentage gain in five months on Monday.
![](http://archives.lincolndailynews.com/2020/Nov/10/images/ads/current/ldn_medical_directory_small2.png)
The overnight rise had prompted some traders to take profits. In
contrast to Pfizer and BioNTech's news, Brazil's health regulator had
suspended trials for China's Sinovac vaccine after adverse side effects
had emerged.
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![](../images/111020PIX/news_n27.jpg)
A passersby wearing a protective face mask stands in front of a
screen displaying Nikkei share average and world stock indexes
outside a brokerage, amid the coronavirus disease (COVID-19)
outbreak, in Tokyo, Japan October 5, 2020. Picture taken with slow
shutter speed. REUTERS/Issei Kato
![](../images/ads/current/fitzpatrick_lda_SPONSOR_2017.png)
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.
Following the big rallies for British Airways owner IAG and U.S. and
Latin American airlines, Qantas Airways closed 8.3% higher to hit
its highest level since March, Japan Airlines shot 20.6% higher and
ANA Holdings rose 17.5%.
In Hong Kong too, Cathay Pacific Airways shares jumped 13%, the best
since July.
Early on Tuesday, Japan's Prime Minister Yoshihide Suga had
instructed his cabinet to design a fresh stimulus package as well..
In the currency markets, the yen strengthened 0.4% to 104.96 per
dollar, while sterling was last trading at $1.3182, up 0.15% on the
day.
The risk sensitive Australian dollar edged up 0.1% versus the
greenback at $0.7279, while Turkey's lira 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
sky-rocketing on Monday in their biggest one-day jump since March.
The yield curve, an indication of risk appetite, hit its steepest
level since March.
![](http://archives.lincolndailynews.com/2020/Nov/10/images/ads/current/lincolnprinters_lda_PPP_2018.png)
Bonds had their biggest selloff since recoiling from March peaks.
The yield on benchmark 10-year U.S. government debt, 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 rose 9 cents, or 0.2%, to
$42.49 after their 8% vault the previous session. [O/R]
"A viable vaccine is unequivocally game-changing for oil - a market
where half of demand comes from moving people and things around," JP
Morgan said in a note.
(Reporting by Scott Murdoch in Hong Kong and Lawrence Delevingne in
Boston; Editing by Christopher Cushing, Richard Pullin and Ed
Osmond)
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