After a strong day for all markets yesterday, today’s session has been more mixed. Asia ticked higher early doors but gave up most of the gains into the close this morning. Europe not too dissimilar with all indices popping at the open but ticking lower shortly after. Nothing alarming though, some have recovered since (FTSE MIB +0.7) and the reality is that they are all still trading above the key levels. IBEX above 8000, EuroStoxx50 bang on 3500 and FTSEMIB above 22000. FTSE 100 the one lagging (mainly financials putting the pressure), key level to watch at 6500. US futures currently flat (ES1 -0.06%) – will be interesting to see how their session goes.

More green on the screen as optimism was boosted overnight. Donald Trump seems to have finally accepted that a formal transition to Joe Biden must begin and news over Janet Yellen (to be picked as Treasury Secretary) were welcomed across all regions. If the news does materialise, she will not only be the first women in such a position but investors are hoping that she will work more effectively with the Central Bank to help the economy.

I came back from my two weeker this morning and I’m still going through my emails. I definitely missed a lot of action (FTSE closed at 5910 before I left, 6332.77 last. SXXP closed at 366.40 back then, 389.74 last) but hopefully we have a bit more of that in the upcoming weeks. History tells us that the last 6-8 weeks of the year are usually strong so fingers crossed for a good end of the year – the SXXP is up +14% this month so looks like we are on the right track!

Reports that the Pfizer vaccine could be given emergency use status, with some of the hardest hit regions in the US receiving doses as early as mid-December, saw the pendulum swing marginally from risk-off to risk on today. While we have seen a little dampening of the earlier gains as we have progressed through the session, it is still positive to see us finish the week on a good note.

After a lower open, news from Pfizer/BioNTech that final results of their Covid vaccine delivered 95% efficacy has seen most risk assets catch a bid. Both Growth and Value were trading in lock step with each other for most of the morning, however currently we are starting to see that diverge with Value outperforming Growth by around 40bps. The usual open-economy names leading Europe higher today, however news that Carnival is cancelling US embarkations for January, has seen the stock doing over 3% and is weighing on the Travel& Leisure sector.  

So a bit of reversion across Europe today, after yesterday’s excitement over the Moderna vaccine news. Implementation timelines remain the main speedbump to any sustained rally, though we are starting to see a growing dichotomy amongst clients, between those buying the longer term horizon, and those trading the shorter-term volatility. Both Growth and Value are currently trading in lockstep with each other after initial outperformance by Growth. We are seeing most sectors in the  red, and while there’s no real surprise seeing Travel & Leisure at the bottom of the pile given today’s reversion, Healthcare is also struggling. The VIX is creeping higher, but nothing much to report there until it gets close to the 25-30 range.

Another Monday and another vaccine breakthrough!

Granted it wasn’t met with quite the same exuberance as last week, however news that Moderna’s vaccine candidate hit its interim target and managed 94.5% efficacy saw markets jump higher around midday today. Participation has flooded back as well in a promising sign after volumes had tailed off into the end of last week. As was the case following the Pfizer news, Value is leading the charge higher, outperforming Growth by over 200bps. The Stoxx Value Index is now only 2% below its June relative peak, which is a key resistance to watch. The vaccine news has also seen a recovery in yields, which has pushed Banks higher. The SX7E now is above the June high of 71.64. Note though that BBVA is also heavily influencing the move in the sector, up 19% after announcing the sales of its US business to PNC.

It’s Friday the 13th but there isn’t anything that scary in the markets today. After the crash, bang, wallop earlier in the week, today we are seeing an almost serene drift sideways into the weekend. Given the week we’ve all had, I’ll keep it brief today.

Pass the inhaler would you?

After the market managed to catch its’ breathe a bit yesterday after an initial wobble, today feels a little more serious. We are still well up on the week, and volumes today are down 20% from yesterday, though seeing both Growth and Value down does suggest that investors are taking a bit of risk off the table. Tech is one of only two sectors trading in the green in Europe, and Banks are down with yields by over 3%, which is reminiscent of what we were seeing pre the vaccine news headlines. Attached is a piece I put together a couple of weeks ago on whether Tech should be seen as Defensive during this time of Covid, have a read. Keep an eye on gold here as well which has popped higher in the last 15mins or so.

So a bit of a pause for breathe today, with volumes running at half of what they were yesterday. While that is a fairly significant slowdown, we are still well above the 20d AVAT. Growth is managing to outperform Value for the first time this week, though after a small wobble early doors, Value is catching up intraday. That wobble came as the STVP got within a whisker of its June high early doors. We are getting close again to testing that level, and a break above we see the next resistance at 1,221.68.