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Weekly market review November 23-27, 2020


November 23, 2020
Weekly market review November 23-27, 2020

Stock market

US stock market indices spent most of the past week in a downward correction following a rally amid news on the effectiveness of a vaccine developed by Moderna. The markets received another batch of positive news on Monday. AstraZeneca, which developed the vaccine together with Oxford University, said its vaccine was 70% effective on average, but double-dose increases efficiency up to 90%. The chief scientific adviser of the government program “Operation Warp Speed”, overseeing vaccine development said that Pfizer and BioNTech vaccine could get FDA approval for emergency use in mid-December, and vaccinations may start a day or two after receiving approval. The vaccine is expected to be approved for emergency use in the UK this week.

On Thursday, the stock market was boosted by news that Senate Republicans majority leader Mitch McConnell agreed to resume negotiations on a new package of fiscal stimulus.

US Treasury Secretary Stephen Mnuchin has called for an end to some of the Fed’s lending programs and asked to return unused $ 455 billion allocated to the Fed under the CARES Act for reallocation for other purposes. The central bank openly disagreed with this move.

Currency market

The dollar index hit an 11-week low due to decreasing demand for safe-haven assets, before making an upward correction, which was boosted by positive US PMIs. Due to the lack of prospects for a new package of fiscal stimulus until January, there are growing expectations that the Fed will expand monetary stimulus in December, which will support the stock market and put downward pressure on the dollar.

Commodities

The price of gold fell to a 4-month low as the dollar made an upward correction, triggered by the positive US PMI data. The downward pressure on the metal price was also exerted by the rise in the yield of US Treasury bonds.

The price of oil has approached the maximum since March amid news on the vaccine, as well as due to tensions in the Middle East. Houthi rebels from Yemen said they fired a missile that hit the oil company’s Saudi Aramco distribution station in the Red Sea city of Jeddah, Saudi Arabia.

Main events of the current week

On Tuesday, data on German GDP and the Ifo business climate index will be presented, as well as the consumer confidence index in the United States. ECB President Christine Lagarde will deliver a speech. Hewlett-Packard and Dell will release quarterly reports after the market close.

On Wednesday, data on US GDP, durable goods orders, jobless claims, and new home sales will be presented, as well as crude oil inventories. FOMC meeting minutes will be published and Governor of the Reserve Bank of New Zealand Adrian Orr will deliver a speech.

On Thursday, ECB publishes an account of the monetary policy meeting


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Categories: Analysis

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