More positive vaccine news sends growth stocks surging higher, as safe-haven bets are unwound
Sentiment was already positive on the back of earlier news that Asia Pacific nations including China, Japan and South Korea had signed the world’s largest regional free-trade agreement. But a few moments ago, there was fresh buying interest in risk-sensitive markets such as stocks and commodity dollars, as investors dumped perceived haven assets including gold and yen.
This was in response to news from Moderna announcing longer shelf life for its COVID-19 vaccine candidate at refrigerated temperatures. This is very important, perhaps a game changer, as the Pfizer vaccine had to be kept in very cold temperatures of minus 70 degrees Celsius, making it logistically difficult to produce and transport large doses of the vaccine. Moderna said that the phase 3 study shows vaccine efficacy of 94.5% - similar, or perhaps even higher than Pfizer’s results. As a result, Moderna plans to seek emergency use authorization for its covid-19 vaccine in coming weeks from US authorities.
The Moderna news comes hot on the heels of similar results from Pfizer last Monday, raising investor confidence that more normal times are around the corner and all this nightmare could soon be over.
However, like Pfizer, the Moderna data still leaves key questions unanswered, such as the length of time immunity will last.
Growth stocks, gold and yen slump
That said, investors are showing increased appetite to position themselves for value stocks and other assets that rely on economic recovery. Indeed, while all the major indices jumped in response to the news, futures on the tech-heavy Nasdaq 100, which contains mostly growth stocks, slumped. Safe-haven gold fell as investors again reduced their exposure to the metal, in much a similar response as last Monday in reaction to the Pfizer news. But gold was still holding above last Monday’s lows, so it remains to be seen how much further will the metal fall.
Overall, it looks quite “risk-on” right now doesn't it? Investors are starting to look forward to the release of vaccines and ignoring the current situation.
FTSE jumps as value stocks soar
It is thus worth keeping a close eye on the FTSE, which until last week was under performing global indices. But now, it is breaking even higher as investors warm further towards financials, materials, industrials and energy stocks – constituents that make up the bulk of the shares listed in the FTSE 100 index.
Source: ThinkMarkets and TradignView.com
The above is the updated chart of the FTSE I posted last week, and as the technical outlook remains the same – you can read more on it
HERE.