The European stocks recovered significantly on the positive news about the COVID-19 vaccine as drugmakers gear up for mass production and distribution and await FDA approval. The Asia markets are looking positive as China’s growth picks up.
The last month of November 2020 ended with global stock markets closing on bumper gains and outperforming the US indices by a good margin. All the positive news of the vaccine has brought fresh hope to the world of the economic activity coming back to the pre-COVID era faster than expected.
Moreover, the continuous stimulus support coming from central has brought investor confidence to new highs. In November, investors were more confident about buying stocks on hopes of market recovery. Drugmakers like Moderna Inc (NASDAQ: MRNA) and Pfizer Inc (NYSE: PFE) are seeking faster approval from the FDA for their COVID-19 vaccine candidates.
As per Goldman Sachs analysts, the FDA is likely to give a nod for the vaccine rollout in the coming weeks. The Goldman analysts noted that the vaccine rollout shall start by mid-December 2020 and nearly 70% of the population in the developed countries will get the vaccine by the fall of 2021.
The MSCI world equity index that tracks shares of over 1600 companies across 23 countries is up by 12.66% for the month. Speaking to Reuters, Mark Haefele, Chief Investment Officer at UBS Global Wealth Management in Zurich said:
“We believe the rally can continue, with the current pipeline of expected vaccine rollouts in line with our central scenario of widespread availability in the second quarter of 2021. We also believe that a divided U.S. government – which looks the most likely outcome – is no impediment to a rising market”.
Similarly, the pan-European Stoxx 600 Index also clocked its best-ever month in November 2020 surging 13.7% higher. On the other hand, all of the top-three US stock indices were up by 10-12% during November 2020.
Global Stock Markets Gained the Most in November
The November month’s rally in the market has been attributed more to the surge in the cyclical stocks. The performance of these stocks has aligned largely with that of the global economy. Moreover, investors have also picked valued stocks that were underpriced but having good fundamentals.
Also, there was less affinity towards growth stocks from the tech sector that had a record run during COVID-19 lockdowns. On the other hand, China’s growth has picked up significantly. This has sent positive indicators worldwide. Equity analysts from Barclays are also backing the “reflation” trade. However, they expect the rally in the emerging markets, value stock and cyclical stock to continue further. In a note to investors, Barclays Head of European Equity Strategy Emmanuel Cau said:
“Understandably, many argue the size and speed of the move in November makes it unlikely the market can rally further, at least for now, as technicals are overbought. We sense that investors may have been caught offguard by the recent risk-on move and hope for a better entry point. A pull back thus seems widely expected at the market level, as well as some reversal in the outperformance of recent winners.”
The performance in the Asian market was moderate in November in comparison to the US and European markets. The MSCI Asia ex-Japan index gained 8% whereas the MSCI Emerging Markets Index was up by 9.2%. Asia shares continued to extend gains on Tuesday on the market recovery hopes.
China’s blue-chip CSI300 index was up by 1.56% today. Similarly, the MSCI’s ex-Japan index was up 1.08%. Stephen Miller, market strategist for GSFM Funds Management told Reuters:
“What we are seeing today is that upward trend reasserting itself, given the positive news on the vaccine front, China’s growth picking up, and the tremendous faith in the ability of central banks to keep the markets afloat”.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
