Investors Excited by Vaccine Trial News and U.S. Election Results
November 9, 2020
Stock markets are rallying on two pieces of news.
- Initial results of Pfizer’s large-scale trials of a Covid-19 vaccine have reportedly demonstrated 90% effectiveness among people without a prior condition.
- Donald Trump has lost his bid for a second term as president, but Republicans appear to have retained control of the senate. This combination of results and the prospect of divided government is what investors most wanted.
Share prices in the Pacific Rim closed up 2.1% in Japan, 2.0% in New Zealand, 1.9% in China, 1.7% in India, 1.8% in Australia, 1.3% in South Korea and 1.2% in Taiwan, Singapore and Hong Kong. European markets so far have risen even more sharply today, including advances of 7.6% in Spain, 5.2% in Germany and 6.5% in France. U.S. futures are soaring, too.
The ten-year U.S. Treasury yield has leaped 11 basis points, while its British and German counterparts have climbed today by 7 and 6 basis points.
The trade-weighted dollar remains near a 2-month low, as a 1.5% appreciation against the yen has been counter-balanced by today’s losses of 2.3% versus the Mexican peso, 1.1% relative to the Australian and New Zealand dollars, 0.6% vis-a-vis the loonie, and 0.1% against the euro, yuan and sterling.
Lessening risk aversion has seen the price of gold settled back 2.2% but WTI crude oil leaped 8.5%. Oil is again trading barely above $40/ounce.
China’s October trade surplus of $58.443 billion in October was more than $10 billion greater than the consensus of analyst forecasts. An 11.4% year-on-year jump in exports was the most in 17 months and dwarfed the 4.7% on-year rise of imports.
Germany’s seasonally adjusted EUR 17.8 billion merchandise trade surplus in September climbed above August’s EUR 15.4 billion and exceeded the monthly averages of EUR 16.8 billion in the third quarter and EUR 8.4 billion in 2Q. Exports posted a 2.3% monthly advance, while imports were 0.1% smaller than in August. The German current account surplus widened to EUR 26.3 billion on an unadjusted basis and exceeded EUR 23.5 billion a year earlier.
Japanese international reserves posted a third straight drop in October. Their combined $18.2 billion decline in August-October nearly reverses the $19.3 billion increase in July.
Chinese foreign exchange reserves slumped about $22 billion in October to their lowest level in four months.
Japan’s indices of leading and coincident economic indicators improved in September to 14- and 6-month highs, respectively.
Consumer confidence in Indonesia fell 4.4 index points to a 5-month low of 79.0 in October and remained far beneath the 126.4 level last December.
Industrial production in Malaysia recorded a 1.0% rise from its year-earlier level in September. That was only the second on-year increase since +5.8% last February. Malaysian unemployment of 4.6% in September was 1.3 percentage points greater than a year earlier.
The Sacci measure of South African business confidence edged down 0.1 points to a 2-month low of 85.7 in September, which compares to a pre-pandemic level of 92.7 in February and a 2020 low-point in May of 70.1.
Mexican CPI inflation accelerated to a 17-month high of 4.09% in October, having bottomed last April at 2.16%. The peso experienced a strong advance today, as investors anticipated better U.S.-Mexican relations under Biden than Trump.
The Sentix measure of investor confidence toward the euro area economy slipped for a second straight month in November to a reading of -10 from -8.3 in October and -8.0 in September, but it remained well above last May’s reading of -41.8.
Factory output in The Netherlands, down 6.8%, posted its eighth consecutive year-on-year drop in September and the tenth slide in the last 11 reported months. Greek industrial production was 2.4% lower than in September 2019. Only in March when Greek output was flat compared to a year earlier did such not post a 12-month decline.
Ireland’s construction purchasing managers index recorded a third straight sub-50 reading in October. A score of 50 in this diffusion index separates improving conditions from deterioration. But October’s rate of contraction in October was only slight with a reading of 48.6, which was higher than the results for August or September.
On the central banking front today, a summary of the late-October Bank of Japan Board meeting revealed some division over the scope for additional monetary policy easing.
A 15.4% month-on-month jump in Australian building permits in September was the most in seven months, and Canadian building permits that month shot up 17.0%, most since the first quarter of 2009. Both improvements were aided by a relaxation of Covid restrictions.
However, pandemic data since Friday have been truly grim both globally and for the United States. Global cases over the past 72 hours shot up 1.7 million, including a rise of 364k in the United States. Since the pandemic’s start, there have been more than 50 million global cases, and about 1.25 million deaths. The U.S. case and death counts now tops 10 million and 240k.
Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China trade balance, German current account, Mexican CPI, Pfiser vaccine trials