Financial Markets Daily Report

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Economic sentiment data and new advances in a vaccine treatment for COVID-19 were the main drivers of a mixed session in financial markets. On the one hand, the University of Oxford and AstraZeneca Plc said that their vaccine prevented 70% of the participants from falling ill. This effectiveness rises to 90% with an alternative treatment.

Financial markets were mixed in the last session of the week amid hopes for a COVID-19 vaccine, the advance of the second wave and growing tensions between the US Treasury and the Federal Reserve.

Investors turned more cautious in yesterday's session. Stocks declined across Europe (at yesterday's EU leaders' videoconference there was no progress on the veto that is paralyzing the EU budget and the NGEU package), while U.S. stocks closed moderately higher amid reports that Congress will resume negotiations on a fiscal stimulus.

Investors exhibited a mixed mood in yesterday's session as they pondered on increasing infections and tighter restrictions. Volatility edged up and stocks advanced moderately across Europe and EM, while U.S. equities declined in spite of Pfizer's announcement that it will apply for the FDA emergency authorization of its vaccine within days.  

As investors weighed positive vaccine developments against rising COVID-19 infections, yesterday markets took a pause after having rallied in the last few days.

Positive news on another COVID-19 vaccine sparked a rally in financial markets at the start of the week. As Moderna reported that its vaccine was 94.5% effective (data from a preliminary analysis of a large late-stage clinical trial), stocks surged across the world, led by sectors sensitive to mobility restrictions, while at-home tech equities declined. 

Last Friday, markets ended one of their best weeks since summer as economically-sensitive assets regained momentum on the back of positive COVID-19 vaccine developments.

This past week's stock market vaccine rally went into reverse on Thursday as Covid-19 cases and deaths climbed across the world.

European sovereign yields edged lower in yesterday's trading session following a speech by ECB chief Christine Lagarde in which she signalled further monetary easing. In her speech, Lagarde emphasised the importance of the duration, and not only the size, of monetary accomodation, and identified PEPP and TLTROs as the main crisis tools.

Investors traded in a risk-on mood in yesterday's session as markets still digested this week's announcement of a breakthrough in the search for a Covid-19 vaccine.

Stock markets soared across the world on Monday as Pfizer and BioNTech announced a breakthrough in their development of a Covid-19 vaccine.

Markets ended last week on a high note on Friday as it became apparent that the US elections were nearing a result. The S&P 500 gained 7.3% over the week and US sovereign yields rose sharply. The election result was finally called on Saturday, in favor of Joe Biden, but Donald Trump announced that he would contest the results.