Daily market review

United States

More positive vaccine and virus treatment news bolstered equities Monday, with stocks leveraged to the re-opening trade leading. The Dow Jones industrial index rose 1.1 percent, the S&P 500 gained 0.6 percent, and the NASDAQ 100 firmed 0.2 percent.

AstraZeneca and Oxford University announced high efficacy rates for their vaccine trials, following similar results from Pfizer and Moderna earlier this month. AstraZeneca/Oxford said one of their vaccine dosages worked up to 90 percent of the time, and their other dosage worked on average 70 percent of the time. Equity sentiment got another boost from news that Regeneron had received emergency use authorization for its antibody treatment.

Cyclicals/value stocks led the winners, with financials, energy, industrials, and materials out-performing on the reopening hopes. Lagging were mega-caps, and stay-at-home stocks that have risen during the pandemic, including communications services, consumer staples, technology, plus health care. Apple was down 3.0 percent, Microsoft was off 0.1 percent, Google declined 0.4 percent, and Facebook declined 0.5 percent.

Among companies in focus, Boeing rallied 6.0 percent on news the European Union will lift restrictions on sales of the 737 Max, and Disney rose 3.5 percent as markets anticipate reopening of theme parks and theaters. Tesla was another big winner, up 6.5 percent after an upgrade at Wedbush.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.87 to US$45.93 while spot gold fell US$35.88 to US$1836.39. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 3 basis points to 1.56 percent while the 10-year note rose 2 basis points to 0.85 percent.


Equities were narrowly mixed Monday in quiet trading as worries about virus cases and lockdowns across Europe offset optimism over vaccines. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX and the French CAC both edged down 0.1 percent, and the UK FTSE-100 was down 0.3 percent.

Equity sentiment generally improved as AstraZeneca became the third Western pharma to report efficacy rates for its Covid-19 vaccine, but AstraZeneca shares declined 3.8 percent on disappointment that its efficacy rate of up to 90 percent was less than the rates reported by Pfizer and Moderna, its US rivals. Investors noted the AstraZeneca vaccine is cheaper and does not need to be stored at subzero temperatures.

Among sectors, oil & gas stocks outperformed as oil prices perked up. Other leaders included basic resources, banks, insurance, travel & leisure, and industrials. Lagging were health care, telecom, food & beverages, personal & household goods, utilities, and technology.

Among companies in the news, Groupe Danone, the French yogurt business, declined 3.2 percent after announcing big layoffs as part of a restructuring. In M&A news, French bank Credit Agricole rose 3.7 percent on news it will bid for Italian bank Credit Valtellinese, and German food kit maker HelloFresh fell 5.9 percent on news it will buy Factor75, its smaller rival.

Asia Pacific

Japanese markets were closed for national holiday Monday, with gains elsewhere in the region limited by concerns about the recent increase in Covid-19 cases. The Shanghai Composite index outperformed with an increase of 1.1 percent, while Australia's All Ordinaries index advanced 0.5 percent. Hong Kong's Hang Seng index posted a modest 0.1 percent increase, with shares of airlines listed in Hong Kong falling after a recent spike in Covid-19 cases there prompted authorities to announce a two-week delay to a planned travel bubble between Hong Kong and Singapore.

Revised estimates for Singapore's gross domestic product in the three months to September show the economy expanded by 9.2 percent on the quarter, higher than the advance estimate of growth of 7.9 percent, up from the 13.2 percent decline recorded in the three months to June. This confirms a sharp rebound in economic activity from the initial impact of the Covid-19 pandemic as public health restrictions were eased, with the recovery broad-based across major sectors of the Singapore economy.

Singapore's headline consumer price index fell 0.2 percent on the year in October after no change in September, largely reflecting a bigger fall in private transport costs and services prices. The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, showed little change in underlying price pressures, with this index also down 0.2 percent on the year after dropping 0.1 percent previously.

New Zealand retail trade sales volumes rebounded at a record pace in the three months to September. Sales volumes had slumped at a record rate in the three months to June during the initial impact of the Covid-19 pandemic, with businesses designated as "non-essential" closed for much of the quarter. Sales surged 28.0 percent on the quarter in the three months to September after they had dropped 14.8 percent previously, while year-on-year growth picked up from a record decline of 14.2 percent to an increase of 8.3 percent.

Looking ahead*

On Tuesday in Asia, the Hong Kong merchandise trade report is due. In Europe, German GDP, French business climate indicator, Germany Ifo survey, UK CBI distributive trades reports are due. In North America, US Case-Shiller house price index, FHFA house price index, US consumer confidence, and Richmond Fed manufacturing figures are due.

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