Don’t be fooled by the relatively small movements across European indices today. The animal spirit is very much alive.
Before we get into the nitty gritty though we have a piece out from the HealthCare team on the Pfizer vaccine results. In this short note, they provide their thoughts on the headline numbers as well on regulatory timelines, supply, implications for other vaccine programmes, as well as the unanswered questions. Definitely worth a look.
*PFIZER VACCINE PREVENTS 90% OF COVID INFECTIONS IN LARGE STUDY
Now that’s a headline to shake off the Monday blues!
After what has been a tough few weeks (even months!) wadding through the election quagmire, with little to no good news around a vaccine, today feels like a great unshackling for the market and investors alike. The SX5E is having its second best day in five years, with Value outstripping Growth by almost 450bps. There is a decent rotation out of the WFH winners and into the WFH losers, with the likes of HFG -12.8%, DIA -16% and OCDO -15%, all suffering as investors take profit. After markets earlier in the session were already trading better thanks to better clarity around the US election, this Pfizer news is what investors all over the world have been waiting for. It is a truly momentous day, and while we are not over the finish line yet, it does feel like the tide is beginning to turn on what has been a pretty brutal year.
After a fascinating week for markets, a well-deserved weekend is finally around the corner. I won’t even get into detail on the elections front (not much progress has been made) but in summary votes are still being counted, Biden getting closer to the White House and Trump moaning every day more. Hopefully we get more clarity throughout the weekend/next week so we can all move on from there.
Despite a busy morning of earnings, today’s session has been definitely quieter. Feels like the excitement over the elections is starting to fade and we are all in a bit of a “sit and wait” mode. Volumes understandably lower than yesterday but remain healthy vs the last 20 days. Biden getting closer to the victory but we all know that the elections are far from over. Trump campaign filed a Lawsuit in the state of Georgia and apparently his fans gathered (some armed) outside vote counting centres – wow, not even in Colombia you see that!
What a roller coaster – a pretty messy but fascinating one!
After a long night for those (including myself) who woke up a couple of times to check on the elections, the outcome wasn’t the best. As feared yesterday, the winner remains unclear and worse than that, looks like we won’t even know the final result for another couple of days. Shocking isn’t it? For now all we can do is wait and hope for the pending states to count the votes quickly! Trump already talking about fraud though so if Biden wins in the end, he won’t have an easy ride, especially with a Republican Senate. Our Economist Clemmie Elwes is all over it so shout if you would like to have a quick chat with her.
The Big Day has finally arrived! After a brutal few weeks of benign volumes it really does feel that investors are starting to get involved. Whether it’s Biden or Trump, there is an overarching sense that clarity is what people really want. Some scenarios suggest that it could be contested and close, which will inevitably end in protracted disputes. Fingers crossed it’s a decisive victory, waking up to more uncertainty isn’t going to be helpful!
Tik Tok, Tik Tok – clock is ticking
After a pretty hectic end of October last week, we kicked off November on a better tone. All EU sectors and indices are trading well in the green (SXXP +1.5%) with the caveat of volumes not reflecting much conviction to the move (EU indices currently trading -16% below their 5d AVAT). The reality is that today was always going to be quiet ahead of the big day tomorrow. Polls over the weekend suggest that Joe Biden is still in the lead but pointed out that some races are still pretty close.
After a couple of turbulent days, we are set to finish the week on a quieter note. Investors are sensibly taking a bit of a pause for breath ahead of what will be a chaotic November and we’re finishing the month with lower volumes across the board. Most indices within 30 bps of yesterday. That means we’ve had a rough week overall – the SXXP -5.7% over the week, DAX -8.6%, CAC -6.7% and IBEX -6.7%. The UK less bad than its peers for once, “only” down -4.7%.
The problem with treading water is that after a while it gets damn tiring.
Europe fought valiantly to keep its head above water for the most part of the morning session however ultimately succumbed to the macro riptide, and was pulled under. Another deluge of earnings read ultimately better this morning, spurring some initial reversion after yesterday’s sell-off, however with COVID infection rates across the region only going one way that reversion was short-lived.
Another dreadful day for markets today as support levels continue to be tested. The SX5E breaking 3054 (June lows) earlier and the psychological support of 3000 also gone so we are now looking at the levels from mid-May (2700, 2963 last). France not reacting well to the news that they might enter into a strict 1-month lockdown. The CAC slipped below its major support of 4666 – next level to watch at 4200. VIX another worrying one to watch as it keeps going up – up +14% today, next resistance at 40 (37.9 last). The DAX (up until a second ago) and the IBEX behaving better than its peers, both holding 11600 and 6421 respectively (DAX just broke it though, 11588 last!!).