Weekly market review December 7-11, 2020

November 7, 2020
US stock market indices renewed historical maximums amid strong demand for risky assets. Fueled by expectations of FDA approval for emergency use of coronavirus vaccine, prospects for a new economic support package in the US, and possible expansion of monetary stimulus by the Fed.
Weekly market review December 7-11, 2020

Effect of the Vaccine to the Stock market

The FDA will decide whether to grant an emergency use authorization for Pfizer’s vaccine on December 10, source: FDA. And a meeting on Moderna’s vaccine will take place on December 17.

A compromise $908 billion coronaviruses relieve package has received support in the U.S. Congress. This potential package has been endorsed by Democratic leaders: House Speaker Nancy Pelosi and Senate Democratic minority leader Chuck Schumer. Senate Republican majority leader Mitch McConnell said there are “encouraging signs” for an agreement on the package before the end of the year.

Nonfarm payrolls data released on Friday was the weakest in six months. However, stock market indices reacted positively, as the probability of expansion of the Fed’s monetary stimulus increased.

The News of The Vaccine Also Shook Currency Market

The dollar index continued to decline amid low demand for safe-haven assets. On Thursday, the ECB will hold a meeting, at which it is expected to decide on expanding the bond purchasing program by 500 billion euros and extending the program until the end of 2021. The expansion of the long-term bank lending program is also likely. The ECB will present updated macroeconomic forecasts, which are likely to be revised downward.

The pound has been experiencing increased volatility amid controversial statements on the progress of negotiations on a trade agreement between the EU and the UK. On Monday, it was reported that the parties failed to agree on three problematic issues, and Prime Minister Johnson is considering the possibility of withdrawing from the negotiations.

Commodities Regained Terrain for a Weakening Dollar

Gold has regained some of its lost positions, having carried out an upward correction on the background of a weakening dollar.

The oil price reached a 9-month high due to increased demand for risky assets, as well as the OPEC + decision to increase production by 0.5 million barrels per month gradually. Also, the participating countries agreed to hold monthly meetings to agree on further actions regarding production cuts.

Main Events of the Current Week for Your Consideration

  • On Tuesday, the German economic sentiment index will be published, as well as EIA short-term energy outlook.
  • On Wednesday, US job openings and crude oil inventories will be presented. Bank of Canada will hold a meeting, following which no changes in monetary policy are expected.
  • On Thursday, UK GDP and industrial production data will be published, as well as US CPI and jobless claims. ECB will hold a monetary policy meeting.
  • US producer price index will be released on Friday.

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Categories: Analysis

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