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LGT Navigator: Covid-19 vaccine news flow supports investor sentiment

November 17, 2020

After the news last week of a successful vaccine against the coronavirus from Pfizer and BioNTech had already caused the markets a brief euphoria, the breaking news that the US biotech group Moderna had developed a highly effective vaccine provided a solid start to the week on the stock markets. Due to the latest news of success, the light at the end of the long corona tunnel seems to intensify somewhat and could once again fuel the recently observed sector rotation in more cyclical and value stocks.

Moderna delivers success with Covid-19 vaccine

In the race for an effective vaccine against Covid-19, the American company Moderna reported a success yesterday in collaboration with the Swiss company Lonza. In a large-scale clinical study, the vaccine is expected to protect against disease caused by the SARS-CoV-2 virus with an efficacy of 94.5%. Moderna is now seeking rapid emergency approval in the US. An important advantage of this vaccine candidate could be its transportability. While the vaccine from Pfizer/BioNTech must be kept at a constant minus 70 degrees Celsius, the candidate from Moderna/Lonza apparently requires only refrigerator temperature. On the European stock exchanges as well as on Wall Street, the latest success report together with the previously published positive economic data from China and Japan supported the share prices.

Sector rotation could regain momentum with vaccine hopes

The EuroStoxx 50 temporarily reached its highest level since the end of February and closed at 3 466.21 points, just under +1% higher. On the New York Stock Exchange, hopes for another promising corona vaccine lifted the Dow Jones Industrial by +1.6% to 29 950.44 points. The S&P 500 closed +1.16% higher at 3 626.91 points and the technology-heavy Nasdaq 100 recorded a more moderate daily gain of +0.63% as the sector rotation increased again, away from the hot technology stocks and towards the previous corona losers, i.e. growth-sensitive stocks. It was only after the close of the trading session that Tesla shares took off by around +10% after the US electric car manufacturer was included in the S&P 500 stock market index. The company, owned by tech billionaire Elon Musk, has a market value of almost USD 387bn. In Asia, however, the stock markets showed no uniform trend this morning, and futures for the European stock indices signaled somewhat lower prices again after the strong start to the week.

New York industry barometer signals weaker growth

The New York Fed's Empire State Index fell to 6.3 points in November, indicating a slowdown in growth in the industrial region around the Big Apple. On the contrary, analysts had expected an improvement from 10.5 points in October to 13.5 points. After the indicator had initially slumped to a record low of -78.2 points in April against the backdrop of the corona crisis and the lockdowns, the regional industrial sector has recovered over time and is now trading in positive territory or above zero for the fifth month in succession.

ECB-Lagarde: common crisis policy strengthens Europe

According to European Central Bank President Christine Lagarde, the cooperation between monetary and fiscal policy has proven its worth and shows that Europe is capable of overcoming the corona crisis together. “Europe is back“, Lagarde stated.

Bundesbank expects a weak final quarter due to lockdowns

The German Federal Bank expects a weak end to the year due to the tense pandemic situation and the recent partial lockdowns for Germany's economy. In its monthly report published yesterday, the central bank stated that the economic recovery that was still evident in Q3 would not continue. However, a slump like the one at the beginning of the corona crisis was not to be expected at present.



Economic Indicators November 17

MEZ Country Indicator Last
14:30 US Retail Sales (October, m/m) +1.9%
14:30 US Import Prices (October, y/y) -1.1%
15:15 US Industrial Production (October, m/m) -0.6%
16:00 US NAHB Housing Market Index (November)  85.0

Earnings Calendar November 17

Country Corporate Period
US Walmart Q3
US Home Depot Q3


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