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Spain & Italy indices breakout!

ESP35 – Daily Candlesticks
Source: GKFX / MT4 (November 16, 2020)

ESP35 has broken sharply higher out of a falling wedge pattern in the past week and today reached its highest since March – testing key resistance at the 8,000 level and its May peak.


TAKEAWAYS

 

•    Spain and Italy indices play catch-up, now at highest since March panic
•    Dow Jones rise 450pts to another record high
•    Moderna says its trial results show a 94.5% efficacy for its COVID-19 vaccine
•    Forex markets muted, lack vaccine enthusiasm 
•    DAY AHEAD: US retail sales, US industrial product, Lagarde speech, Powell speech, 

 

GURU WISDOM


“The best thing about the future is that it comes one day at a time.” – Abraham Lincoln
 

MARKETS


It was the second big vaccine rally on a Monday in a row. The Dow Jones rallied to a new record high, coming very close to 30,000. The Nasdaq gained but underperformed as investors again rotated out of tech stocks and into real-world cyclical stocks. European indices saw big gains, some hitting their highest levels since the March sell-off. Stocks in Asia had set the positive tone after the weekend-signing of the world’s biggest ever trade deal among Asian countries. 

With all the action in stock and bond markets, forex has been more muted. The dollar was holding its own thanks to rising bond yields. Gold and silver prices dropped but rebounded well off the lows and silver even finished in the green as concerns about the current virus situation offset some of the optimism about the future. The price of oil gained ground alongside stock markets and saw oil stocks outperform.
 

New vaccine


Moderna reported its phase 3 trial results showed a 94.5% efficacy. Vaccine efficacy is the percentage reduction of disease in a vaccinated group of people compared to an unvaccinated group. In this case, 95 people in the trial contracted covid-19 but only 5 of them came from the vaccinated group. The next bit of vaccine news to look out for is from AstraZeneca, which was the frontrunner but was forced into a delay when one of the trial participants got sick. 
 

Europe breakout


The vaccine news once again proved very popular across stock markets –notably in Europe where the pandemic was more severe. Spain’s IBEX index jumped a massive 2.6%, helped by news from Spanish bank BPVA. Italy’s IBEX was up 1.98%, comparing favourably with Germany’s DAX, which rose 0.47%. The good vaccine news is naturally proving more potent to stock markets that suffered more at the hands of the coronavirus. Italy and Spain were two of the worst-affected countries and their stock markets have suffered, but now they are playing some catch-up.
 

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