Europe Heads Higher Tech Under Pressure
European stocks are pointing to a firmer start still buoyed by the game changing vaccine news from earlier in the week. In light of Pfizer’s announcement that its vaccine was found to be 90% effective, expectations are now for the global economy to recover considerably more quickly. Goldman Sachs is predicting US growth will be back to pre-pandemic levels by Q2 of 2021. Expectations for UK growth is , in some cases equally optimistic, and the UK could also return to pre-pandemic growth levels potentially as soon as mid-2021.
The UK NIESR GDP reading for the three months to October is expected to show that momentum in the British economy kept building through Autumn, up 20.1% , compared to 15.2% in the 3 months to September. However, with lockdown 2.0 now in full swing November is expected to show a sharp fall. That doesn’t mean to say that October’s print is meaningless, a strong reading would reveal that the UK economy is falling this month from a stronger position.
Those stocks which suffered the most during the pandemic, such as travel, aviation and hotel stocks are seen as those benefitting the most in this weeks’ vaccine inspired rally. Other beaten down areas of the market such as energy and banks have also been in favour as investors search for areas of value .The euphoria of Monday has certainly calmed considerably, particularly given the very difficult few months that need to be navigated through first before any covid vaccination becomes widely available, hopefully by the spring.
Divergences in Europe
Equities in the UK, France and Spain are once again looking to outperform the Dax. This could be because these are the countries which have been hardest hit by the pandemic with higher mortalities and a bigger hit to the economy – therefore they stand to gain more from a vaccine. The other point to consider is that the Dax had already put in an impressive run up from its mid-March lows, outperforming other EU indices to trade almost at pre-pandemic levels even prior to the vaccine announcement.
In an otherwise quiet day on the economic calendar, investors will be looking towards a speech by ECB President Christine Lagarde for clues over the economic outlook for the region particularly following the vaccine news and the prospects of stimulus.
FTSE chart
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024