Market snapshot: stocks shift as world waits for more vaccine data

Profit taking has followed a stunning rally through November, but how will this week end?

Some of the lustre from earlier in the week has been slightly tarnished, with investor sentiment now more measured in the face of the issues facing the Covid-19 vaccine.

While the world waits for further progress on the vaccine in terms of testing, regulatory approval and then distribution, the second wave ominously rolls on. California has now joined Texas in exceeding one million cases, while reimposed restrictions in the likes of Detroit and Chicago are a stark reminder that, while there may be light at the end of the tunnel, the pandemic’s human and economic impacts continue.

In addition, there seems to have been a continuation of the impasse regarding a fiscal stimulus package in the US, while over the course of the week there has been some profit taking in big tech, in anticipation of the economic pendulum swinging back to benefit more traditional sectors.

Even so, it has been a progressive week in all and, in the year to date, the Dow Jones has moved back into positive territory and is up by 1.9%, the S&P 500 by 9.5%, while the tech-heavy Nasdaq remains ahead by 30.5%.

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In the UK, the premier index has had an unusually strong week, and has clawed back some of the year’s losses. While the FTSE100 remains down by 17% in the year to date, the past week has seen a rally of around 6%.

The spike was propelled in particular by a recovery in beaten-down stocks which stand to benefit from a return to some kind of normality, and by the very sector constituents which have held the index back over recent months. 

Airline and airline-related stocks such as Rolls-Royce (LSE:RR.) moved ahead, while the potential for a recovery in oil demand was positive for the likes of BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB). Meanwhile, the improved sentiment also extended to the banks, where an improvement in economic fortunes post-pandemic could mitigate some of the billions of pounds already taken in bad debt provisions this year. 

While more volatility can be expected as the finer details of any vaccine release emerge, there has nonetheless been notable progress in improving sentiment over the course of the week.