Interactive Investor

Market snapshot: US jobs data offsets vaccine joy

3rd December 2020 08:07

Richard Hunter from interactive investor


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A positive reaction to the UK vaccine rollout and similar in the US soon is cooled by economic reality.

Conflicting factors are keeping a lid on the generally positive direction of travel for financial markets, although the S&P 500 in the US nudged ahead to another record closing high.

A private payrolls release in the States was light of expectations, underlining an unemployment situation which is in need of repair. As such, calls for a further stimulus package are becoming louder in the face of an economy which is still blighted by the economic effects of the pandemic. While Congress apparently remains undecided on the next step, hopes for a stimulus before the year is out remain high on the agenda for investors.

The approval of the Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) vaccine in the UK has focused expectations that the US will imminently be following suit, with the Food and Drug Administration due to convene next week, and with the New York Governor expecting the state’s first delivery the following week, which would be enough for an initial 170,000 residents.

With an increasing amount of the vaccine optimism now being priced in, there is nonetheless more clarity with the election uncertainty having passed and with thoughts now turning to economic recovery.

The indices all remain positive in the year to date, with gains of 4.7% for the Dow Jones, 13.6% for the S&P500 and 37.6% for the Nasdaq.

The UK’s approval of the Pfizer/BioNTech vaccine was the first to be announced globally and lifted investor sentiment accordingly, with the FTSE 100 enjoying a spring in its step. The glide path to an eventual recovery of demand for airline travel and to some extent oil saw the likes of Rolls-Royce (LSE:RR.) and BP (LSE:BP.) among the strongest gainers.

While the index remains down by 14% in the year to date, there are increasing signs that the frostiness of sentiment towards the UK is beginning to thaw among international investors, notwithstanding the very real challenges of the Brexit and Covid-19 repercussions to come.

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