26 November 2020

European Stocks End Mixed as Vaccine Rally Stalls


News shaping
the markets today


What’s happening: European stocks closed mixed on Wednesday, as markets took a breather after the sharp rally earlier this week on positive covid-19 vaccine news.

What happened: Investor sentiment for most of the week was driven by encouraging vaccine announcements from three drug-makers for their covid-19 vaccine candidates in late-stage trials. Political certainty in the US also helped lift the market mood.

The rally took a pause, however, ahead of the Thanksgiving holiday in the US. Wall Street will remain closed today and reopen only for a short trading session tomorrow.

Why it matters: US stock markets closed mostly lower on Wednesday, a day after the Dow Jones index closed above the 30,000 milestone for the first time ever on the previous day, buoyed by optimism around positive vaccine news from Pfizer, Moderna and AstraZeneca, along with the transition of administration to President-elect Joe Biden.

Banking stocks in Europe remained in focus after Vice-Chairman of the ECB’s (European Central Bank) supervisory board Yves Mersch said in an interview with the Financial Times that eurozone banks could restart paying dividends from 2021 in case their balance sheets showed resilience. The ECB had earlier instructed banks to halt dividend pay-outs and share repurchases due to the negative impact of the pandemic.

The utilities sector was among the top performing on Wednesday, with shares of United Utilities gaining more than 4% after the UK-based company reported profit growth for the first half of the year. Personal care stocks also surged on Wednesday, boosted by Unilever’s shares gaining more than 5%.

Meanwhile, the UK announced record borrowing levels, as the pandemic is expected to result in the biggest plunge in the country’s economic production in 300 years. The Office for Budget Responsibility projected the British economy to shrink by 11.3% in 2020, before expanding by 5.5% next year. The country’s borrowing is expected to reach £394 billion in 2020, which will be the highest in the UK’s peacetime history. Weighed by this news, London’s FTSE 100 declined 0.64% on Wednesday.

The pan-European Stoxx 600 index closed the previous session slightly lower by 0.08% with oil and gas shares leading the decline after rallying sharply in the previous sessions. However, telecom stocks provided support to the index, rising over 1% on Wednesday. The German DAX 30 dropped 0.02%, while the French 40 gained 0.23%.

What to watch: Markets await a basket of economic reports from the Eurozone, including loans to households, loans to private sector and money supply M3. Speeches from ECB chief economist Philip Lane and board member Isabel Schnabel will also remain in focus.

Investors will continue to keep an eye on the rising covid-19 cases, with the number of infections climbing past 60.2 million worldwide.

The Markets Today


Gold will be in focus today after regaining momentum in the previous session.

Context: Gold prices traded slightly higher on Thursday after sliding sharply toward the $1,800 level in earlier sessions.

Details: A disappointing jobs report from the US and the continued rise in covid-19 cases worldwide had investors worried about the pace of recovery in the global economy, resulting in a pause in the rally of risk assets.

The US Labor Department said that Americans filing jobless claims for the first time had surged to 778,000 last week, from 742,000 in the previous week amid rising covid-19 cases and some restrictions on businesses. Analysts had projected 730,000 initial jobless claims for the latest week.

Market sentiment was also hurt by news of the US daily death count crossing 2,000 for the first time since May, with hospitalisations climbing to a record of over 89,000 on Wednesday.

While investors turned to safe-haven options like gold yesterday, some analyst reports suggested the rally in precious metals had peaked due to covid-19 vaccine news. Investors are torn between vaccine news on the one hand and rising infections on the other.

US gold futures were trading higher by 0.2% at $1,808.50 an ounce at 6am GMT, while silver futures had risen by 0.3% to $23.44.

What to watch: Trading is expected to remain light today, with US markets closed for the Thanksgiving holiday. Investors will continue to monitor the progress in the development of covid-19 vaccines.

Other Markets: US indices closed mostly lower on Wednesday, with the Dow Jones and S&P 500 down by 0.58% and 0.16%, respectively, while the Nasdaq 100 rose by 0.48%.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


Germany’s GfK consumer climate indicator, France’s consumer confidence, UK’s car manufacturing output, South Africa’s producer prices, Turkey’s gross foreign exchange reserves, Mexico’s GDP, Canada’s average weekly earnings, Argentina’s consumer confidence and retail sales as well as Brazil’s net payrolls.


ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.