Markets Remain Near Highs

The Catch Up

- Asian markets remained near record highs this morning, as investors weighed renewed doubts about the coronavirus vaccine against hopes that some of the region’s economies will recover quicker than their Western peers boosted by Chinese data releases.

- Makrets started off bad but have since moved to gain more. The CSI300 started off at 0.13% but is currently trading 1.2% higher than its open, while the Hang Seng is up 0.6%. The KOSPI was at the same levels as earlier, at 0.3% higher.

- The ASX covered most of its 0.5% losses, now trading at 0.17% in the red. The index was affected by Treasury Wine Estates Ltd falling by 11.25% after China slapped tariffs on Australian wine, which is likely to worsen a diplomatic row between Beijing and Canberra.

- The Nikkei was up 0.4% while US500 futures were 0.08% higher, reversing small earlier losses. At the same time, DAX futures were 0.12% higher.

- Yesterday, US financial markets were closed for the Thanksgiving holiday and will trade on a partial schedule later today.

- British drugmaker AstraZeneca’s coronavirus drug was touted as a “vaccine for the world” due to its inexpensive cost, but the efficacy of the vaccine is now facing more intense scrutiny, which experts say could delay its approval. Several scientists have raised doubts about the robustness of the results showing that the shot was 90% effective in a sub-group of trial participants who, by error initially, received a half dose followed by a full dose.

- As global confirmed cases are now more than 61 million, there are some rough roads ahead for global recovery, and a failing vaccine could provide some rationale for a delay.

- Infections and hospitalizations in the US with regards to Covid-19 are at a record and experts warn that Thanksgiving gatherings could lead to further infections and deaths.

- In the UK, more than 20 million people will be forced to live under the toughest restrictions even after a national lockdown ends on Dec. 2. Partial lockdowns in some European countries have also raised concern about economic growth.

- These risks are acknowledged by policymakers as the European Central Bank’s chief economist highlighted these concerns in dovish comments on Thursday, which pushed European bond yields lower.

- Similarly, the yield on the benchmark 10-year Treasury notes fell to 0.8586% as some investors sought the safety of holding government debt.

- Despite this, the Euro was still higher, last at $1.1924,because currency traders have largely priced in expectations for additional ECB easing next month. On the other hand, the Dollar fell toward its lowest in more than two months.

- In commodity markets, WTI prices extended their declines from a seven-month high due to signs of oversupply, moving to sub-$45 per barrel. Brent was also down below $48 per barrel. The drops reflect worries about falling fuel demand due to the new lockdowns while, at the same time, some oil producers are not complying with agreed production cuts, which raises concerns about oversupply.

- In the crypto world, Bitcoin moved up to $17,256 yesterday, but it tumbled by 8.4% in the previous session after failing to take out its record high of $19,666. The cryptocurrency showed little reaction to a report in the Financial Times that Facebook will launch its own Libra digital currency in limited format next year. Bitcoin has rallied around 140% this year, fuelled by demand for riskier assets.

- Earlier today, Chinese industrial profit just turned positive on a year-to-date basis, with the y/y figure growing by 28.2%. At the same time, German import prices were down by less than expected.

The Look-Out

- French CPI is expected to have come out at 0.1% higher on a y/y basis, while consumer confidence in the EU is forecast to have taken a turn to the worst.

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