ZFX: Markets were under correction as investors temper vaccine optimism

The markets were boosted by the positive news of vaccine this week, but on Wednesday, the optimism further faded as the traders believe that it is still a long way to the economic recovery.

On the other hand, the rebound of the dollar caused downward pressure on those riskier assets, and the US 10-year Treasury yield are steadied at 0.9% level after knowing such good development of vaccine. These days tech stocks were bearish as investors started to rebalance the portfolio over these months.

On Wednesday, the Wall Street was mixed, while the Dow fell just 23 points, but the Nasdaq bounced back 2% from the recent weakness. So, tech stocks on Thursday were good after the rebound overnight stateside. However, the stock markets are still struggling, waiting for further hints leading the direction.

Investors are cautious about not only monitoring such a controversial US election, but also the number of the confirmed cases in the US. Despite positive development of the vaccine front, the pandemic remains severe over the US and Europe, setting a new record of average daily cases or daily deaths. Investors are now worried that a stricter lockdown measures may be implemented, which may be one of the reason for turning back to tech stocks.

Overall speaking, the markets are under adjustment, digesting all the factors so far. The dollar keeps its strength these day as the expectations about vaccine indeed lowered the necessity of a further Fed stimulus.

However, Sterling and Kiwi were a bit bullish. As New Zealand may impose negative interest rates, investors are even more optimistic about the NZ economy. On the other hand, the EU-UK trade talk was no much progress, triggering a hope of setting another deadline, supporting the Sterling.