Global equities stagnate, bond yields slide as caution replaces vaccine euphoria By Reuters

By Sujata Rao

LONDON (Reuters) – Global stocks stagnated on Friday as spike in COVID-19 hospitalizations in the US and Europe dampened euphoria over a promising vaccine, although Wall Street appeared poised for a firmer opening According to the news, President-elect Joe Biden was set to consolidate his electoral victory.

U.S. futures rose 0.5% to 0.830 GMT after Edison Research projected Biden to capture the state of the Arizona battlefield, further weakening President Donald Trump’s efforts to overturn the results of the November 3 elections.

However, the pan-European fell 0.2%, just above its opening levels. MSCI’s all-country stock index fell 0.1%

“You got the news overnight in the United States about COVID, which is not so good and which … gives investors the opportunity to make profits after the Pfizer and post-American elections,” said François Savary, investment director at Swiss asset manager Prime Partners.

On Thursday, Wall Street finished lower on news of the rise in coronavirus infections and as investors weighed the timing of an effective vaccine rollout. Several US states have introduced stricter social distancing rules following reports of record hospitalizations

In Europe too, the number of hospitalizations is now higher than at the peak of the first wave and officials have said infection control measures must continue.

U.S. Federal Reserve Chairman Jerome Powell said on Thursday that progress in developing a coronavirus vaccine was good news, but short-term economic risks remain, underscoring the likely need for a stimulus additional government.

Global equities, however, are up 1.3% for the week. They reached record highs on Monday when the pharmaceutical giant Pfizer (NYSE 🙂 reported that their vaccine was 90% effective. Russia went on to report that its vaccine trial has shown promise as well.

European markets lost 0.1% to 0.7%, but the pan-regional STOXX index is set for a second week of big gains. It has risen 5% so far this week as vaccine news prompts more investors to buy shares in banks and travel agencies.

Previously, Chinese blue-chips lost 1% after the Trump administration announced it would ban U.S. investments in companies linked to the Chinese military. A spate of high-profile bond defaults by state-owned companies also weighed in.

225 fell 0.57%.

Some investors saw the pullback as a buying opportunity.

“I think it’s darkness just before dawn,” said Michael Frazis, portfolio manager at Frazis Capital Partners in Sydney.

“You have the second wave of coronavirus, new rounds of shutdowns, clear issues around the world, trips leaving … But at the same time, we have the strongest evidence that we have a vaccine.”

STIMULUS

One of the sticking points in the markets has been the inability of US lawmakers to agree on an adequate spending program. The need for this stimulus was underscored by Thursday’s data showing a slower pace of employment recovery and low inflation.

While Democrats in Congress have urged negotiations on a multibillion-dollar stimulus package, leading Republicans have dismissed it as too expensive.

U.S. Treasuries yields slipped further, with 10-year yields falling about a basis point to 0.87%, well below the seven-and-a-half-month high of 0.98% reached on Monday .

The yield curve, an indicator of growth and inflation expectations, has also flattened.

“This (the rebound in bond yields) received a further boost from weaker-than-expected US inflation data for October which was released yesterday, and which corresponds to a weaker economic reality,” analysts said. ‘ING Bank.

Germany’s 10-year yield slipped 1.5bp to -0.54%, breaking this week’s two-month highs.

(GRAPHIC – S&P 500 Sectors Win Amid Vaccination Hopes: https://graphics.reuters.com/HEALTH-CORONAVIRUS/ygdpzbrmxpw/chart.png)

Oil prices remained on track for a second week of gains, but the surge in COVID-19 and rising inventories pushed Brent futures down 1% to $ 43 a barrel.