(24 November 2020)DAILY MARKET BRIEF 1:US Presidential Transition
US equities rose on Monday after a wobbling session that started on a bearish note. The stock market reacted positively on the fresh COVID vaccine news, upbeat economic data, and Donald Trump’s decision to clear the way to Joe Biden to transition to the White House, though he still doesn’t recognize the election results. Also, investors welcomed the news that Biden plans to name former Fed Chair Janet Yellen as the next Treasury secretary.
The vaccine news boosted value stocks, which pushed the Dow higher by 1.12%. Elsewhere, the S&P 500 rose 0.56%, and Nasdaq added 0.22%. Six of the 11 sectors tracked within the S&P index closed higher, with energy and industrial surging 7% and 1.6%, respectively.
British AstraZeneca announced that its vaccine candidate might be about 90% effective, according to a preliminary analysis of its late-stage study. Also, the vaccine can protect people from a potential COVID infection for six months. If approved, AstraZeneca said it would have about 200 million doses by the end of this year, which is five times more than Pfizer. In the first quarter of next year, the British drugmaker might have 700 million doses. In the US, the health regulator may give its nod to the vaccine made by Pfizer next month.
On the economic front, US business activity rose at the fastest pace in over five years in November, driven by the biggest surge in manufacturing since September 2014. The IHS manufacturing index surged from 53.4 in October to 56.7 in November, beating expectations of a decline to 53. The services index jumped to 57.7 from 56.9 in October, which is the highest since April 2015. Analysts expected a decrease to 55.
Stocks were also boosted after Trump said that its staff would cooperate with the Biden team and would let the transition happen. Also, Biden is about to nominate former Fed Chair Janet Yellen as US Treasury secretary. Yellen is regarded as an experienced pro-stimulus economist that handled the damage caused by the financial crisis in 2008.
In individual corporate news, General Motors has to recall almost 6 million trucks and SUVs with possibly dangerous Takata airbag inflators. The US safety agency said yesterday it had rejected the company’s request to avoid the callback. GM said in a filing that it would have to spend about $1.2 billion to fix the issue.
Tesla surged 6% on Monday, getting close to a $500 billion valuation. It has surged about 27% since investors found out that it would finally be included in the S&P 500 index.
In Asia, equities are mostly bullish in early trading on Tuesday, as investor sentiment is lifted by the vaccine optimism and the transition of power in the US.
At the time of writing, Chinese stocks are declining. The Shanghai Composite is down 0.44%, and the SZSE Component has dropped by 0.67%. Tensions between the US and China are worsening as Trump’s administration is introducing fresh measures against China.
Japan’s Nikkei 225 surged over 2.5%, and Australia’s ASX 200 closed around 1.2% higher.
South Korea’s KOSPI is up 0.68%, and Hong Kong’s Hang Seng Index inched higher by 0.07%.
European stocks will open higher as index futures in all markets are in the green.
