Stocks hold steady as virus surges

November 20, 2020: Global stock markets moved gingerly Friday, with Europe posting modest gains while Wall Street dipped as traders weighed coronavirus vaccine hopes against lockdowns and the lack of a new US stimulus deal.

In Europe, both Frankfurt and Paris ended the day with a gain of 0.4 percent, while London added 0.3 percent.

But in late morning trading in New York, the Dow was down 0.3 percent and the S&P 500 slid 0.2 percent. The tech-heavy Nasdaq Composite managed a 0.1 gain.

“The small gains in Europe and modest losses in the US sum up an indecisive session for stock markets, and indeed, apart from the initial huge rally on 9 November, an indecisive three-week period,” said Chris Beauchamp, chief market analyst at online trading firm IG.

The November 9 rally was triggered by the announcement that the vaccine developed by Germany's BioNTech and US giant Pfizer was 90 percent effective according to early trial results.

It has subsequently said the effectiveness is 95 percent, and announced Friday it is preparing to file an emergency request for authorisation to roll it out and help defeat a disease that has killed almost 1.4 million people and infected close to 57 million.

Moderna has also said trial results have shown its vaccine to be 95 percent effective at preventing Covid-19.

Given the degree to which the virus has upended the world economy, the news has helped push stocks higher, with the Dow hitting a new record high and approaching the 30,000 points level.

“In light of the vaccine stories, it feels like stocks could be in limbo for a while until we find out about the vaccine situation — in either direction,” said market analyst David Madden at CMC Markets UK.

“Seeing as a lot of progress has been made with respect to coronavirus drugs, it seems like a floor has been put in place under equity benchmarks now, but that could all change should the drug story get derailed,” he added.

Traders have also been closely monitoring the prospects of a new deal on US stimulus materialising after the president of a regional Federal Reserve bank warned Thursday the United States could see growth contract again in the fourth quarter.

In the aftermath of the presidential election, moves to agree a new stimulus package to support the virus-ravaged US economy remain deadlocked.

“The move by the Department of Treasury to allow some of the Fed's emergency lending programs to expire at the end of the year is also garnering attention but the market reaction thus far has been muted,” said analysts at Charles Schwab brokerage.

Markets have also been buffeted by fears of where the virus is going as infections and deaths continue to mount and with European governments forced to impose fresh lockdowns.

Major US cities such as New York have also put strict containment measures in place and on Thursday California announced a curfew across almost all of the state.

Meanwhile, Tokyo has raised its virus alert to the highest level.

“There's the push-pull of short-term versus long-term and that's what investors are looking at right now,” Chris Gaffney, at TIAA Bank, said. “There are some very serious risks in the short term, especially with the lockdowns.”

– Key figures around 1630 GMT –

  • London – FTSE 100: UP 0.3 percent at 6,351.15 points (close)
  • Frankfurt – DAX 30: UP 0.4 percent at 13,137.25 (close)
  • Paris – CAC 40: UP 0.4 percent at 5,495.89 (close)
  • EURO STOXX 50: UP 0.4 percent at 3,466.88
  • New York – Dow: DOWN 0.3 percent at 29,385.91
  • Tokyo – Nikkei 225: DOWN 0.4 percent at 25,527.37 (close)
  • Hong Kong – Hang Seng: UP 0.4 percent at 26,451.54 (close)
  • Shanghai – Composite: UP 0.4 percent at 3,377.73 (close)
  • Euro/dollar: DOWN at $1.1860 from $1.1876 at 2200 GMT
  • Pound/dollar: UP at $1.3293 from $1.3264
  • Dollar/yen: UP at 103.80 yen from 103.72 yen
  • Euro/pound: DOWN at 89.38 pence from 89.49 pence
  • West Texas Intermediate: DOWN less than 0.1 percent at $41.71 per barrel
  • Brent North Sea crude: UP 0.4 percent at $44.38 per barrel
Posted on: 2020-11-20T23:25:00+05:00