ZFX: Vaccine boost! Investors bet on the return of bull market
Vaccine hope was the major market driver on Monday, boosting risk appetite all over the world. All the industries that suffering from severe pandemic influence surged sharply after the good news from developments of vaccine.
The biggest US drug maker Pfizer Inc and German BioNTech SE said that, the latest result from the large-scale clinical trial showed the coronavirus vaccine was more than 90% effective prevention.
Markets in Asia were generally good, following the mixed Wall Street overnight. Traders were cautious in Tech industries, especially all are in high value after the coronavirus pandemic. The Nasdaq dropped over 1.5% while the Dow jumped nearly 3% on Monday.
While some investors bet on a sooner economic recovery, some analysts believe that the markets were a bit overreacted to the news as it is not a full report of the vaccine, that further explaining the effectiveness of specific targeted groups.
Gold price was the other focus on Monday as it tumbled over 5%, as much as $100 per ounce, after the positive development result. The sell-off pressure was mainly related to the risk appetite in the whole financial market, that significantly lower the safe haven demand for Gold. Furthermore, the news lowered the dovish expectation from Fed, even the other central banks, a more aggressive approach in the monetary policies, boosting the greenback. The dollar index bounced back from around 92 level, steadied at around 92.7 on Tuesday.
Stepping into European session, optimism over the vaccine faded. European stocks were a bit volatile in the opening on Tuesday, following the momentum of a cautious Asian session. Again, tech stocks were dropping while the old economy like banking sector, are overall doing good.
ZFX analyst Jacob Leung said that, the rebound of the dollar showed some risk-off situation already, somehow reflecting overreaction of the news. On the other hand, there is still uncertainty from the US election as Trump administration has requested the U.S. Court to intervene regarding the vote counting. Profit taking is likely to happen after such a big move.
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