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Sentiment remains supported by vaccine news

Fawad Razaqzada Fawad Razaqzada 23/11/2020
Sentiment remains supported by vaccine news Sentiment remains supported by vaccine news
Sentiment remains supported by vaccine news Fawad Razaqzada
Another Monday, another positive vaccine update and thus another cheerful news for bullish investors. Although by midday in London the major European stock indices had given up a good chunk of their earlier gains, they maintained their overall bullish structure, nonetheless. Meanwhile, in FX, the dollar continued to fall – a clear indication that investors were seeking risk rather than haven. This was also evident by rising oil prices.

AstraZeneca-Oxford vaccine

AstraZeneca’s vaccine candidate prevents an average of 70% of coronavirus cases, which is somewhat disappointing when compared with Moderna and Pfizer-BioNtech efficacies rates.

HOWEVER, there are some important differences that needs to be taken into account. This figure is the average between two dosing regimens, with one having a 90% efficacy rate and the other a 62% efficacy rate.

The 90% efficacy rate was achieved when the vaccine was given as a combined half a dose, followed by a full dose a month later. So, in the regard, the result was very similar to the other vaccines with a high efficacy rate. AstraZeneca’s vaccine also has logistical advantages, as it can be stored at normal fridge temperatures, making it scalable and easier to deliver to a much wider demographic. In contrast, the Pfizer-BioNTech and Moderna vaccines need to be stored at much colder temperatures.

What’s more, the AstraZeneca-Oxford vaccine is produced at cost price and not for profit, and will thus cost a lot less than Pfizer and Moderna vaccines, which are made for profit. Given these benefits, the vaccine is likely to be in huge demand from poorer regions of the world.

Long and short of it

The key takeaway point is that we are getting ever closer to hopefully becoming immunised to COVID, which means life can return to more normal levels soon. As such, investors are continuing to shrug off concerns about the ongoing global surge in coronavirus cases and piling back into sectors that had been hurt badly by the pandemic such as travel and leisure. Crude oil prices have also risen as investors hope that with the development of vaccines, there will be a quicker return to normal levels of travel and economic activity.

EU Services PMI underscore extent of lockdown damage

Meanwhile today’s European PMI data revealed some interesting insights, highlighting how the fresh lockdowns have started to hurt the recovery. Everyone was expecting economic data in the services sector to deteriorate in the coming weeks due to the impact of the latest lockdowns and that’s exactly how it has turned out.
 
French (38.0 down from 46.5), German (46.2 down from 49.5) and Eurozone (41.3 from from 46.9) services PMI all fell further into contraction. The U.K. service PMI (45.8, down from 51.4) also fell into contraction, albeit it still managed to beat expectations.
 
As the focus remains on development of vaccines and a potentially sharp recovery starting from around the Christmas period, when lockdowns are expected to be lifted across Europe, the markets hardly responded to the services PMI data. Still, the pound outperformed slightly given that the U.K. data was stronger, although this could also be because of rising Brexit optimism.
 
Surprisingly, UK’s manufacturing PMI easily beat at 55.2 vs 50.2 expected, and compared with a reading of 53.7 previously. Crucially for the euro zone, the German manufacturing PMI also beat at 57.9 vs 56.6 expected, even if it fell from the prior reading of 58.2. However, French manufacturing PMI unexpectedly fell back to contraction, printing 49.1 vs 50.1 expected and 51.3 last.

With stocks rising, watch out for a bullish breakout on the German DAX index from this consolidation pattern:

DAXSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Mohammed Zidan
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Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

Victor Golovtchenko
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Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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