Thursday, November 12, 2020

European Stocks Gain for Third Straight Session


News shaping
the markets today


What’s happening: European stocks rose on Wednesday, recording gains for the third consecutive trading session.

What happened: Equity markets globally were driven higher by rising hopes of a vaccine being launched for covid-19, which has claimed more than 1.2 million lives and caused widespread economic disruption.

The Stoxx Europe 600 index recorded its biggest single day gain since March on Monday and continued its positive momentum for the next two trading sessions. The index remained elevated even with cautious comments from ECB President Christine Lagarde keeping investors on edge.

Why it matters: All major pharma companies are in a close race to launch their covid-19 vaccine. Pfizer, in collaboration with BioNTech, got ahead of this race by achieving more than 90% efficacy in the ongoing Phase III trials for its candidate. The update from the late-stage study was much better than expected and fuelled a rally in global stocks.

Investor sentiment was further lifted by Eli Lilly receiving clearance from the US FDA (Food and Drug Administration) for its antibody-drug to treat mild-to-moderate cases of coronavirus.

Meanwhile, ECB President Christine Lagarde made cautious comments on Wednesday, warning that the region “could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved.” However, the comments did not dampen bullishness among investors, who remained hopeful of economic activity returning to normal and a recovery in the global economy being just around the corner.

The Stoxx 600 index, which had spiked around 4% on Monday, recorded gains for another two days and closed higher by 1.1% on Wednesday.

Even amid the broad rally, banking stocks declined in Europe. ABN Amro led the downturn after reporting results for the third quarter. Although the bank reported earnings growth for the quarter, investors focused on the massive contraction in its net interest income and cautious guidance.

London’s FTSE 100 gained 1.35% on Wednesday, while the German DAX 30 and French 40 added 0.4% and 0.5%, respectively.

What to watch: With Donald Trump still raging legal battles against the alleged electoral fraud, markets fear a delay in the US stimulus package. Investors await the industrial output data from the Eurozone, which is expected to rise 0.7% in September. Speeches from various ECB members will also remain in focus today.

The Markets Today


Crude oil will be in focus today, ahead of the EIA’s (Energy Information Administration) report on crude inventories.

Context: Crude oil closed slightly higher on Wednesday on hopes for a resumption in economic activity, triggered by positive covid-19 vaccine data, as well as an industrial group announcing a bigger decline in crude inventories.

Details: The API (American Petroleum Institute), late Tuesday reported a higher-than-expected decline of 5.1 million barrels in US crude supplies in the week ending November 6.

Monday’s news of positive data from Pfizer’s covid-19 vaccine candidate provided a boost to oil prices, helping WTI (West Texas Intermediate) crude record gains of around 12% so far this week.

The gains were contained, however, by the OPEC (Organization of the Petroleum Exporting Countries) cutting its 2020 global oil demand expectations by 300,000 bpd (barrels per day) to 90.01 million bpd.

WTI crude for December delivery edged higher by 0.2% to close at $41.45 a barrel on the NYMEX, after rising as high as $43.06 earlier in the session. Brent crude gained 0.4% to settle at $43.80 a barrel. The global benchmark has added around 11% so far this week.

What to watch: Markets await the EIA’s weekly report on crude stockpiles, which is releasing a day later than usual due to the Veterans Day holiday on Wednesday. US crude oil inventories are projected to drop 0.913 million barrels in the latest week, versus a 7.998 million barrel decline in the week ending October 30.

Gasoline inventories are likely to decline by 0.263 million barrels, while distillate inventories expected to contract by 1.846 million barrels last week.

Other Markets: US indices closed mostly higher on Wednesday, with the S&P 500 and Nasdaq 100 up by 0.77% and 2.01%, respectively. The Dow Jones index bucked the trend, slipping 0.08%.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


Germany’s consumer prices, UK’s GDP growth rate, balance of trade, manufacturing production, business investment, industrial production and construction output, South Africa's unemployment rate, mining production, gold production and SACCI business confidence index, Russia's GDP as well as the US inflation rate, initial jobless claims and Fed Chair Powell speech.