Market Recap

The most important events of the last two weeks have undoubtedly been the Pfizer/ BioNTech and Moderna vaccine news. Earlier this morning, AstraZeneca/Oxford also released the results of their trials, with a significant success rate and the added benefit of being more easily storable, and hence accessible to larger portions of the world population.

Furthermore, over the weekend the US announced that it seems to be targeting December 11th or 12th for the start of the rollout, according to the head of the Warp Speed program. This would be significant, especially considering that the current number of cases in the US remain very elevated.

Indeed fresh restrictions have been imposed in some states, as the surge that is largely attributed to the US election and subsequent protest gatherings, has resulted in higher than acceptable levels of cases. On the positive side, Regeneron’s antibody cocktail received an emergency-use authorisation from the US FDA for treatment of early Covid-19 symptoms.

UK news portals have reported that the UK may give emergency approval to Pfizer’s vaccine as soon as this week. This is also in anticipation of the relaxation of measures in time for the Christmas period.

As far as cases go, following the introduction of stricter restrictions a couple of weeks ago, cases are stabilising in Europe and various governments are now planning to exit their lighter lockdowns. The French government is planning a three-phase reduction in lockdown measures in December. Italy is also mulling over the temporary easing of lockdown restrictions in the run-up to Christmas to allow shops to open for longer hours in the worst hit regions.

On the restrictions, today we’ll know a bit more about how much they have stunted the economic recovery as the flash November PMIs from around the world are released.

The news regarding the efficacy of the vaccines moved markets, however less than the original Pfizer announcement. It did however give the rotation trades into cyclicals slightly more momentum. The star of the week was Tesla, which gained almost 20 percent after it was announced that the electric carmaker would be included in the S&P 500 from December.

Banks stocks on both sides of the Atlantic continued their rally even as yields fell. US banks rose 1.2 percent while European Banks were up a greater 4.0 percent. Similarly, European equities again outperformed given the STOXX 600’s more cyclical bias. The STOXX 600 ended the week 1.2 percent higher while the Italian FTSE MIB, French CAC 40, and Spanish IBEX all outperformed by even more.

Sovereign bonds gained even with the positive vaccine news as yields dropped back from close to their pandemic highs. US 10-year Treasury yields fell 7.2 basis points lower to finish at 0.82 percent and 10-year Bund yields were 3.6 basis points lower to -0.58 percent.

Elsewhere, credit spreads in the US and Europe tightened further on the week. US High Yield cash spreads were 11 basis points tighter, while European High Yield cash spreads tightened 18 basis points.

In commodities, WTI Brent crude oil each rose just north of 5 percent as global demand forecasts rose sharply, while on the other hand gold kept selling off, down 0.96 percent.

Finally, the last word goes to Bitcoin, which rallied a staggering 14.1 percent on the week, as the cryptocurrency is dialling in on its all-time high from December 2017 again, but this time with more institutional buy-in.