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LGT Navigator: Promising Covid-19 vaccine offers some light at the end of the tunnel

November 10, 2020

The news that Pfizer and BioNTech have demonstrated a good 90% chance of success with their Covid-19 vaccine caused a firework on equity markets and promises a light at the end of a very long tunnel. Stocks that suffered particularly badly from the pandemic, such as travel and tourism companies or airlines, recorded strong price gains, while investors took profits on stocks that benefited from the crisis, such as Zoom & Co. At the start of trading in Europe, however, there are already signs of a much more cautious attitude on the part of investors. In addition, stock market sentiment is also being dampened by Trump's still uncertain reaction and the legal dispute over the US elections.

Promising Covid-19 vaccine offers light at the end of the tunnel

The US pharmaceutical company Pfizer and German-based BioNTech yesterday published promising results for a vaccine against Covid-19, which has shown in broad tests that the vaccine provides more than 90% protection against the novel corona virus. The two pharmaceutical companies now expect to apply for approval with the US Food and Drug Administration (FDA) as early as next week. However, the procedure is still at a very early stage and patience is still required. In addition to the hope for a corona vaccine, the election of Joe Biden as the new US President continued to create a positive mood on the stock markets.

The Dow Jones Industrial and the broad-based S&P 500 rose strongly at the beginning of the week by +2.95% to 29 157.97 points and +1.18% to 3 550.50 points respectively. The picture was different on the Nasdaq technology exchange, where some corona profiteers suffered heavy daily losses. The technology-heavy Nasdaq 100 lost -2.16% on Monday, closing at 11 830.39 points. While the rally on most Asian stock markets has already flattened out considerably, the futures markets for European exchanges are also already signaling lower prices again. A damper on sentiment is the threat of legal action in Washington. The majority leader in the Senate, Mitch McConnell, stressed that President Trump was 100% right to have possible irregularities in voting investigated and to demand recounts.

EU hopes to settle trade dispute with the US

With the Democrat Joe Biden in the White House, Brussels hopes to improve relations with the US, which were not always easy during the Trump era, and to settle the trade dispute with Washington. EU Vice President and Trade Commissioner Valdis Dombrovskis said that the EU is prepared to withdraw the punitive tariffs that have come into force today at any time, even if the US also suspends its tariffs. However, a unilateral waiver on the part of the EU would be out of the question. At the center of the trade dispute between the EU and the US are above all the state aid for the aircraft manufacturers Airbus and Boeing, but also the US punitive tariffs on steel and aluminum imports introduced in 2018.

Economic outlook for the eurozone has deteriorated again, according to Sentix

The more than 1 000 analysts questioned monthly by the German financial market analysis company Sentix again showed themselves to be more pessimistic in the latest survey against the background of the corona pandemic. The sentiment barometer for the eurozone fell by 1.7 points to minus 10.0 points in November compared to October. This means that the assessment of the economic outlook has deteriorated for the second consecutive month. The financial experts surveyed assessed both the current economic situation and the economic expectations more negatively than in the previous month. On the other hand, the mood is supported by the additional monetary policy measures announced by the ECB for December in order to contain the economic consequences of the second pandemic wave, Sentix commented. 

Convergence in Brexit Poker?

Statements from the British government give hope for a compromise in the negotiations on future relations between London and Brussels. Although there are still differences, especially on the controversial issue of fishing rights, both sides are now prepared to make progress, said British Environment Minister George Eustice.



Economic Indicators November 10

MEZ Country Indicator Last
02:30 CN Consumer Prices (October, y/y) +1.7%
02:30 CN Producer Prices (October, y/y) -2.1%
08:00 UK Unemployment Rate (October) 4.5%
08:45 FR Industrial Production (September, y/y) -6.2%
11:00 GE ZEW Expectations (November) 56.1
11:00 EZ ZEW Expectations (November) 52.2
11:00 IT Industrial Production (September, y/y) -0.3%

Earnings Calendar November 10

Country Corporate Period
GE Adidas Q3
GE Henkel Q3
GE Deutsche Post Q3
IT Telecom Italia  Q3


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