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LGT Navigator: Bargain hunters benefit from short correction in technology stocks

November 12, 2020

The risk adjustments and shifts triggered by the short-term announcements on the efficacy of the corona vaccine from BioNTech and Pfizer apparently provided investors with the opportunity to replenish their holdings in technology stocks at more favorable prices. Thus, the Nasdaq corrected its slip, while on the other hand, share prices on Wall Street and in Asia did not find a clear direction. Although the latest success news on the vaccine issue raises hopes for a foreseeable end to the crisis, the pandemic and the associated partial lockdowns in many European countries still hang like a dark cloud over the capital markets.

Bargain hunters benefit from short correction in technology stocks

Technology stocks, which have recently been weak against the backdrop of a sector rotation, showed their strong side again yesterday and the Nasdaq 100 closed +2.31% higher at 11 892.93 points. The Dow Jones Industrial failed to break through the 30 000 mark for the time being and closed yesterday's trading session at 29 397.63 points (-0.08%). At the same time, the market-wide S&P 500 increased by +0.77% to 3 572.66 points, its highest level since the beginning of September. Meanwhile, US bond trading remained closed due to the veteran holiday. On the Asian stock markets, vaccine hopes provided a positive underlying mood, but no cross-country trend was apparent.

In addition to the inflation data from the US, statements by US Federal Reserve Chairman Jerome Powell, ECB President Christine Lagarde and the British central bank governor Andrew Bailey are in the spotlight today at an online forum of the ECB under the motto “Central Banks in a Shifting World“.

EU secures 300 million Covid-19 vaccine doses from Pfizer

The European Executive signed a supply agreement with the two pharmaceutical companies Pfizer and BioNTech for a total of 300 million doses of the promising vaccine against the coronavirus disease. Delivery is expected to start at the end of 2020, subject to clinical success and regulatory approval of the vaccine. With three other vaccine manufacturers, Sanofi, AstraZeneca and Johnson & Johnson, the EU Commission had previously concluded similar contracts for promising vaccine candidates.

Strong demand for EU “social bonds“

The second issue of bonds by the European Union to finance the corona aid program met with lively interest on the bond market. Bonds with a five-year term were subscribed for more than EUR 85bn, which was more than ten times the volume of EUR 8bn offered. There was also strong demand for the long-term 30-year Eurobonds. EUR 6bn were offered here, with demand exceeding EUR 55bn. The EU is using the proceeds to finance its reconstruction fund to deal with the corona crisis. The EU plans to raise a total of EUR 100bn. The papers are attractive for investors, as they offer a higher yield than German Bunds with an “AAA“ credit rating.

ECB Governing Council seeks new member

Meanwhile, the Economic Committee in the EU Parliament gave green light to the candidacy of Dutchman Frank Elderson for the Executive Board of the European Central Bank (ECB). At the end of November, the European Parliament will vote before the final decision is made by the EU heads of state and government. Elderson would succeed Yves Mersch from Luxembourg on the Governing Council of the ECB in December. The ECB's Executive Board has six members, including ECB President Christine Lagarde.



Economic Indicators November 12

MEZ Country Indicator Last
08:00 GE Consumer Prices (October, y/y) -0.5%
08:00 UK Industrial Production (September, y/y) -6.4%
11:00 EZ Industrial Production (September, y/y) -7.2%
14:30 US Consumer Prices (October, y/y) +1.4%
14:30 US Core Consumer Prices (October, y/y) +1.7%

Earnings Calendar November 12

Country Corporate Period
GE Siemens Y
GE Merck KGaA Q3
GE Deutsche Telekom Q3
UK Burberry H1
US Walt Disney Q4
US Cisco Systems Q1


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