Adam Vettese, UK Market Analyst at eToro, has provided his daily commentary on traditional and crypto markets for November 10, 2020.
Stocks around the world soared on Monday after news broke that Pfizer’s Covid-19 vaccine has shown to be 90% effective in trials. Embattled value stocks handily outperformed growth, as a vaccine opens up a route to recovery for sectors such as financials and energy. The iShares S&P 500 Value ETF (IVE) finished the day 4.2% higher, while the iShares S&P 500 Growth ETF (IVW) closed the day down 0.6% after opening the day almost 3% higher. Airline stocks were also notable winners of the vaccine news, with British Airways parent IAG gaining more than 25%, while US giant Delta added 17%.
One piece of news putting a damper on the day’s optimism came after market hours with reports that US Attorney General William Barr has authorised federal prosecutors to pursue any “substantial allegations” of voting irregularities, before certifying the presidential election. Although evidence is not yet forthcoming, and Biden’s lead is unlikely to be in question, the news raises the spectre of a Trump attempt to use the Justice Department to try and alter the outcome.
Nonetheless, global markets were untroubled overnight, with Japan’s Nikkei and Hong Kong’s Hang Seng index ahead by 0.3% and 0.7% respectively as the positive sentiment post the vaccine news continued.
The main losers were fixed income assets where yields – which had been negative on some core government bonds like US treasuries and UK gilts – started to rise, moving back into positive territory as the uncertainty around the virus started to dissipate.
Dow wins, Nasdaq loses in vaccine rally
The Dow Jones Industrial Average was the big winner of the three major US stock indices on Monday, gaining 3% while the tech-heavy Nasdaq Composite fell by 1.5%. A Covid-19 vaccine is not a good thing for all companies, with many technology names standing to lose some of the ground they have gained due to pandemic restrictions. Amazon, for instance, fell by 5% as an end to the pandemic means at least some customers returning to in-person shopping. Video conferencing service Zoom Video Communications fell by 17%, as its tools will likely be used less if employees return to offices. In the Dow, Home Depot fell by 5%, as homeowners have used pandemic-induced lockdowns as a chance for home improvements.
Towards the top of the Dow, meanwhile, were financial firm American Express, airline maker Boeing and oil giant Chevron, which gained 21.4%, 13.7% and 11.6% respectively.
- S&P 500: +1.2% Monday, +9.9% YTD
- Dow Jones Industrial Average: +3% Monday, +2.2% YTD
- Nasdaq Composite: -1.5% Monday, +30.6% YTD
Rolls Royce jumps 44%, while 19 FTSE 250 names gain more than 20%
London-listed shares also jumped sharply on Monday, with the FTSE 250’s 5.2% gain, taking its year-to-date loss back towards single-digit territory (although it still stands at 13.9%). In total, 19 names in the FTSE 250 gained more than 20% on Monday, led by catering firm SSP and cruise company Carnival, which added 56% and 39% respectively. SSP operates food outlets across airports and railway stations, including brands such as Upper Crust and YO! Sushi.
The FTSE 100 was led to a 4.7% gain by Rolls Royce, International Consolidated Airlines Group and Informa, which jumped 44%, 25% and 22% respectively. Rolls Royce’s share price is heavily linked to the state of the airline industry but even after its Monday gain, its stock remains down more than 50% year-to-date. At the bottom of the index were online grocery delivery firm Ocado Group and Just Eat Takeaway, both of which have made substantial gains during the pandemic. Ocado fell by 11.7%, while Just Eat fell 10%.
- FTSE 100: +4.7% Monday, -18% YTD
- FTSE 250: +5.2% Monday, -13.9% YTD