Opening Bell: Global Rally Slows After Vaccine Reality Check; Gold Rebounds

Opening Bell: Global Rally Slows After Vaccine Reality Check; Gold Rebounds

Investing.com  | Nov 10, 2020 12:16

  • Investors rotate out of tech shares and into value stocks
  • Questions remain about Pfizer vaccine, tempering risk-on
  • Gold pares losses

Key Events

Monday's global rally weakened in pre-US market trade on Tuesday, but haven assets continue to see increased demand and tech shares remain under pressure as investors realize that what was considered a vaccine breakthrough is not yet a sure thing. Pfizer's potential coronavirus vaccine faces many hurdles before approval, and distribution poses additional challenges.

Contracts on the S&P and tech-heavy NASDAQ are in the red on Tuesday as investors continue to see value in Dow and Russell 2000 components which stand to benefit from any economic recovery that a vaccine would facilitate.

Oil continues its recovery, having posted its largest one day percentage gain in five months on Monday.

Global Financial Affairs

In Europe, the travel and energy sectors built on Monday's strong 4% rally, leading the Stoxx 600 index moderately higher.

This morning, stocks in Asia trimmed gains, while China’s Shanghai Composite (-0.4%) fell into the red.

Yesterday, US equities pared a powerful rally after the Republican Senate Majority Leader, Mitch McConnell called for a smaller coronavirus relief package then what Democrats want. This after the US Federal Reserve warned that if the pandemic’s economic impact worsens in the coming months, the financial markets could be severely hurt.

McConnell also said that President Donald Trump is within his rights to contest the presidential election results, increasing political instability.

During Monday's New York session, the S&P 500 index lost record gains made at the open, but still managed to close at a two-month high on unusually high trading volume after the news from Pfizer (NYSE:PFE) that a coronavirus vaccine it is developing with BioNtech (NASDAQ:BNTX) had prevented 90% of infections in a late-stage trial.

The Dow Jones Industrial Average closed more than 800 points higher, adding 3% to its value, also testing all-time highs.

Dow Jones Daily

The mega cap index came to a technical crossroads, developing a shooting star at its mid-February all-time high, while having provided an upside breakout of a range.

The NASDAQ 100 dropped as big tech companies, including Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), were sold off amid the rotation out of stocks that had performed well during the pandemic, into those that had suffered and were suddenly considered bargains.

The VIX fell back to its lowest level since Aug. 28.

VIX Daily

The volatility index had bounced off those lows later in Monday's session.

Yields, including for the US 10-year Treasury, reached the highest since Mar. 19.

Treasuries Daily

The jump confirmed the return of risk-on sentiment.

Having jumped 2% in trading on Monday, the dollar remained little changed.

Dollar Index Daily

The greenback is stuck at the neckline of a H&S continuation pattern, signalling a resumption of the downtrend since the March highs.

Gold, which plunged 5% on the vaccine news, pared losses.

Gold Daily

The recovery reignited investor appetite for risk, but the yellow metal nevertheless found support by the rising wedge. That is a testament to gold’s strength.

Oil extended Monday's powerful rebound to just below the $41 level, its highest point since Oct. 20, on the expectation that a vaccine will spur the economy to return to normal.

Oil Daily

From a technical perspective, oil is in an ideal place for a short, having found resistance at the top of its falling channel, following a bearish wedge.

Up Ahead

  • On Wednesday Alibaba (NYSE:BABA) holds its annual Singles’ Day event, an online global shopping phenomenon that generated $38 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 at an online ECB Forum entitled “Central Banks in a Shifting World” on Thursday.
  • The US reports CPI and initial jobless claims on Thursday.

Market Moves

Stocks

  • The Stoxx Europe 600 Index was little changed.
  • Futures on the S&P 500 Index were little changed.
  • The MSCI Asia Pacific Index gained 0.6%.

Currencies

  • The Dollar Index was flat.
  • The British pound gained 0.79% to $1.3268.
  • The Japanese yen strengthened 0.1% to 105.26 per dollar.
  • The Mexican peso strengthened 0.104% to 20.3338 per dollar.

Bonds

  • The yield on 10-year Treasuries increased less than one basis point to 0.93%.
  • The yield on 30-year Treasuries declined one basis point to 1.70%.
  • Germany’s 10-year yield decreased less than one basis point to -0.51%.
  • Britain’s 10-year yield was unchanged at 0.372%.

Commodities

  • West Texas Intermediate crude increased 1% to $40.71 a barrel.
  • Gold strengthened 1.3% to $1,887.45 an ounce.
  • LME aluminum rose 0.16% to $1,904.75 per metric ton.
  • Iron ore climbed 1.88% to $119.84 per metric ton.

Investing.com

Latest comments

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Mareks Boriss
Mareks Boriss

vaccine reality check....🤣  ... (Read More)

Nov 10, 2020 14:24 GMT· Reply
Valentin Mastacan
Valentin Mastacan

So where is the news what is come next...???  ... (Read More)

Nov 10, 2020 12:38 GMT· Reply
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