S&P 500 and Dow Jones stock market indices reached new historical maximums on Monday amid US presidential election results and positive news regarding the coronavirus vaccine trial. Joseph Biden secured his victory in the US presidential election by defeating Trump in the state of Pennsylvania, where Trump previously led. Biden got the necessary 270 votes in the Electoral College. The Electoral College will elect a president on December 14. Republicans are likely to retain a majority in the Senate, blocking Democratic initiatives such as tax increases and stricter regulation of technology companies and banks. Meanwhile, Trump does not admit defeat in the election. His team is filing lawsuits in several states, alleging violations of electoral procedures. Trump also intends to hold rallies of his supporters.
Pfizer and BionTech, which has jointly developed a vaccine against coronavirus, said that initial results from the final phase of the vaccine trial showed its 90% effectiveness in preventing COVID-19 infection. The companies expect to receive US authorization for emergency use of the vaccine at the end of November. This news boosted risky assets. The most significant growth was demonstrated by the shares of companies related to tourism, transport, oil production, and the banking sector. In turn, the shares of companies operating in the field of e-commerce, cloud, and streaming services fell.
The dollar index hit a 2-month low on Monday amid declining demand for safe-haven assets, as well as expectations for a massive fiscal stimulus package following the victory of Democratic candidate Biden. Against the background of the election results, the Chinese yuan and the Mexican peso strengthened due to expectations of a softer foreign trade policy under the new president.
Oil price rose more than 10% on Monday amid a report on progress in a vaccine trial and increased demand for risky assets.
Gold acted as a safe-haven asset on Monday. The price of metal plunged 5% after news of a successful vaccine trial was released.
Main events of the current week
- On Tuesday, data on UK claimant count change and average earnings, German economic sentiment index, and US job openings will be published. Adidas and Porsche will report earnings before the market open.
- The Reserve Bank of New Zealand will hold a monetary policy meeting on Wednesday. It is expected that the regulator will not change its monetary policy and will leave the interest rate at 0.25%. ECB President Christine Lagarde will deliver a speech.
- On Thursday, data on UK GDP and manufacturing production, US CPI and jobless claims, as well as crude oil inventories will be presented. Bank of England Governor Andrew Bailey and ECB President Christine Lagarde will speak. Disney will report earnings after the market close.
- US PPI will be released on Friday. Bank of England Governor Bailey will deliver a speech.
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