Market Update – 17 Nov 2020

It was a big week last week, turning fifty, a Scotland win, Covid vaccines, the FTSE 100 acceleration, Brexit discussion and oh yes Scotland winning.

I couldn’t in good faith start today’s update without reference to the Scotland Football team on qualifying for the Euro’s after a 22 year hiatus.  It is not of course true that it’s been 22 years since we last qualified as the women’s team have a tremendous record for qualifying, it’s only the men’s team that have struggled.

However in true tradition of taking ourselves seriously the 1977 disco classic Yes Sir, I can Boogie has now been adopted as the new national anthem!! (Sing along below)

Yes sir, I can boogie
But I need a certain song,
I can boogie, boogie woogie all night long

Yes sir, I can boogie
If you stay, you can’t go wrong
I can boogie, boogie woogie all night long

I can’t say it’s the reason (as it’s not) but following the outpouring of joy, and dad dancing, throughout Scotland, the FTSE 100 spiked to its highest point in five months yesterday after a second coronavirus vaccine was revealed to be nearly 95% effective.

US firm Moderna said it was a ‘great day’ today as they revealed the vaccine confidante had been successful following a trial involving 30,000 people. It will be put forward for approval in the next few weeks.  Reacting to the news, shares leapt up by 1.8% within minutes of the announcement. It is another positive sign of how vaccines could restore confidence to the economy once they’re officially approved.

However, companies that have benefited as a result of the pandemic saw their shares fall following the announcement. Just Eat dropped by 2.07%, while Reckitt Benckiser, which makes Dettol, fell 2.72%.   Meanwhile British Airways owners, IAG, shot up by 15%, while engine maker Rolls Royce rose by 10.5%.

The FTSE100 has a similar reaction when Pfizer confirmed that their vaccine had proven to be 90% effective during trials.  The announcement caused prices to jump by 5.5%, adding around £82bn the values of its shares.

Scientists have said the results of the vaccine trial bode well for other Covid-19 jabs, with Oxford University and UK pharmaceutical giant AstraZeneca due to report the results from their candidates in the coming weeks.

In the U.S. stocks closed at new records after the promising trial news from Moderna left investors hopeful that the country may have two coronavirus vaccines available on a limited basis by the end of 2020.  By market close, the Dow Jones was up nearly 471 points, or 1.6 percent.

The promising vaccine news comes as the United States braces for what many expect to be the darkest period of the pandemic. The total number of reported U.S. coronavirus cases surpassed 11 million on Sunday, only one week after hitting the 10 million mark. The number of fatalities from the virus now stands at more than 246,000.

Moderna’s stock soared with Monday’s trading, closing up nearly 9.6 percent. Investors flocked back to companies whose stocks have been heavily battered by the pandemic, especially in travel and hospitality. Carnival cruises climbed nearly 9.5 percent, while United Airlines closed up almost 5.2 percent and American Airlines gained almost 4.5 percent.

“Energy stocks and travel & leisure stocks will be the first benefactors on this news as they have been some of the hardest hit sectors due to distancing and shutdowns,” Anthony Denier, chief executive of the app-based brokerage Webull, said in an email to The Post. “We will also see a rotation out of the stay at home winners like tech and media as portfolios start to rebalance for a re-opened economy.”

Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, who was one of three people briefed on the Moderna data by an independent committee Sunday morning, called the results “as good as it gets.”   He predicted that some doses could be available for high-risk people before the end of 2020.   Unlike Pfizer, which invested $2 billion of its own money in researching and developing a vaccine, Moderna is part of Operation Warp Speed, a government initiative designed to erase the financial risk of vaccine and therapeutics development by providing upfront funding to companies and helping coordinate the trials.

Asian markets soared on Monday after China and Japan joined forces with more than a dozen economies in the region to sign the worlds largest trade deal covering about 30 percent of the global population and a similar share of economic output, after eight years of negotiations. It is the second major trade pact in two years that excludes the United States.

Japan’s economy has bounced back from recession with growth of 5% in the third quarter of this year.   It had seen its economy shrink during 2020 as lockdowns hit its manufacturing sector and consumer spending.   The world’s third biggest economy is now showing signs of recovery, although some analysts cautioned that further growth is likely to be modest.

Asian economies are leading the way for a global economic recovery, in what some have called a “Zoom boom”.   This refers to the increase in demand for screens and laptops as more people work from home, and use online meeting platforms like Zoom.   Asian economies are among the largest producers of laptops, communication equipment and other

Oil markets also rose Monday amid the optimism. Brent crude, the international benchmark, was trading up 2.6 percent, at $43.89 per barrel, by 4 p.m. West Texas Intermediate crude, the U.S. oil benchmark, rose 3.1 percent, to trade at $41.38 per barrel.

So all in all a good week, there will be bumps in the road but as a Scotland fan I’m used to it.

Stay Safe