10 November 2020
The rally in global stock markets continued on Tuesday after Pfizer said the day before the COVID-19 vaccine trial showed promising results, but caution about the depth of the pandemic and the uncertain political climate in the U.S. limited profit growth.
Futures pegged to the Dow Jones, S&P 500 and Nasdaq rose 0.5 percent, indicating that blue chip stocks could extend the rally on Monday, which raised the underlying indices to record highs.
There is still a long way to go before the vaccine can be introduced. But the announcement by Pfizer "gives investors some hope that the vaccine may appear sooner than expected and pave the way for some normalcy," said Milan Katkovic, market analyst at Axi.
The market reaction underlines the need for diversification for investors in the next phase, towards more cyclical parts of the market that lagged behind in 2020, and away from the major technologies and major beneficiaries that remain at home, according to Mark Hefele, Chief Investment Officer of UBS Global Wealth Management. He said the next stage of inventory growth will be due to the end of political uncertainty in the U.S. and the sustained growth of global mobility that the vaccine can bring.
After positive news on vaccines, the S&P 500 index rose about 4 percent at the beginning of the New York trading, reaching a new record high. But after McConnell's Senate majority refused to recognize the presidency of President-elect Joe Biden, the index reversed many of those gains, rising only 1.2%.
President Trump "100% within his rights" to investigate possible voting violations and weigh legal options, McConnell said.
U.S. Attorney General bill barr authorized the federal prosecutor's office to open an investigation into electoral fraud and violations, which are serious violations of U.S. political norms. Investors may not take it too seriously, SpreadEx financial analyst Connor Campbell said.
In the U.S., the biggest winner was the energy sector, which rose about 14 percent due to a sharp rise in oil prices, analysts at Deutsche Bank said. Big tech stocks fell behind after Zoom fell 20 percent along with other stay-at-home stocks, including Netflix and Clorox. Optimism returned to cruise and airline stocks.
In Europe, Rolls-Royce led the London FTSE 100, up 24%, followed by the owner of British Airways IAG, which rose 6.6%.
Most of the region is still in partial or total isolation, and it is critical to avoid feedback and feedback between the different levels of restrictions, as it significantly damages consumer and business confidence, said Katkovic.
The FTSE 100 index rose 1 percent, while the Euro Stoxx index of the top 50 Eurozone stocks rose 0.5 percent, while the German DAX fell 0.2 percent.
China's Shanghai Composite fell 0.4 percent after data showed that consumer prices rose the slowest in ten years in October, but both Japan's Topix and Hong Kong's Hang Seng rose 1 percent to close.
Crude oil continued to rise on Monday. Futures on Brent rose 1.6 percent to $43.08 per barrel, while WTI rose 1.4 percent to $40.87 per barrel.
Gold rose 1.4% to $1,897.85 per ounce, partially offset by a 5% decline on Monday.