On Tuesday, world stock markets finally got a well-deserved breather after they were propelled higher again by the second major COVID-19 vaccine boost within a week. This put Europe on the path for its best month in more than three decades. There was a 0.2% dip in the pan-European STOXX 600 in early moves, but there was little indication of the bull-run in November coming to an end, which has also prompted a surge in emerging markets and confidence-sensitive commodities. MSCI’s world stock index that tracks 49 countries reached a record high, after rising 11% throughout the month.
In the currency markets, the U.S. dollar continued to decline whereas China’s yuan reached a 2 and a half year peak. The monthly investor survey by BofA on Tuesday showed a ‘full bull’ mode in investors. With profit expectations and global economic growth reaching a 20-year high amongst those surveyed by the bank, there is a chance that rotation will continue in the sectors hit by the coronavirus for the rest of the year. However, there is some cashing in expected in the next few weeks or months, according to BofA. The latest market boost came after the announcement by Moderna on Monday regarding its COVID-19 vaccine.
According to the company, their experimental vaccine has proven to be 94.5% effective in prevention of the infection. The U.S.-based drug maker became the second one, after Pfizer Inc., to announce such promising news. There was a 9.6% increase in the company’s shares after the news. There was a 0.2% overnight gain in the MSCI’s Asia-Pacific shares index outside of Japan. This was a day after the index had reached its highest level since 1987. There was a 0.4% increase in Japan’s Nikkei 225, after it reached a 29-year high the day before, but recent bond defaults caused Chinese blue chips to fall as sentiment suffered.
Analysts said that markets can now see the end of the coronavirus tunnel, as by 2022, a large part of the world’s population will have received the vaccine. They said that this was causing a change in the attitude of the investors. Oil prices were also up due to the positive vaccine news, which meant that they could increase their 16% November gains. U.S. crude rose by 3.02% on Monday to reach $41.57 per barrel and there was a 0.7% jump in Brent, after it had already increased by 2.43% the day before. As far as currency markets are concerned, the central bank in China lifted the yuan midpoint on Tuesday to its highest in almost 29 months.
A day earlier, there were some strong gains in spot prices due to strong economic data. The risk-friendly Australian dollar also saw a boost due to vaccine news, which reached a one-week high against the U.S. dollar. Views on the greenback were clouded because of increasing number of cases in the United States, which declined against a basket of major currencies. There was little reaction in Euro zone bond markets to Poland and Hungary’s veto of the European Union’s recovery fund and budget in early Tuesday trading.