News & Analysis

Overnight on Wall Street: Tuesday 01 December 2020

December 1, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Global equities edged lower on the final day of a mammoth month-long rally despite more positive vaccine news:

  • Moderna announced that the primary efficacy analysis of the Phase 3 study of mRNA-1273 conducted on 196 cases confirms the high efficacy observed at the first interim analysis. The data analysis indicates a vaccine efficacy of 94.1%. Moderna requested clearance from the US and Europe regulators on Monday and the Company is expecting the VRBPAC meeting for mRNA-1273 likely on December 17, 2020.
  • Novavax, the biotechnology company carrying the COVID-19 vaccine program in the UK completed enrollment of 15,000 participants in a pivotal Phase 3 clinical trial being conducted in the U.K. to determine efficacy and safety of NVX-CoV2373. 

After a very strong rally in November, investors assessed their positions for the final month of the year. Major indices recorded their best monthly performance in a very long time.


Source: Bloomberg

In the US share market, major US equities closed in the red similar to its European counterparts: 

  • The Dow Jones Industrial Average lost 272 points or 0.9% to 29,639.
  • S&P 500 fell by 17 points or 0.5% to 3,622. 
  • Nasdaq Composite ended relatively flat with 7 points lower to 12,198.74.

Currency Markets 

In the FX space, major currencies were mixed against the US dollar. The greenback gained some upside momentum but largely due to the end-of-month positions. 


Source: Bloomberg

On the economic front, the PMI data in the US and China stood out:

China

  • China’s November month NBS Manufacturing PMI grew past 51.5 forecasted and 51.4 previous to 52.1 while the Non-Manufacturing PMI rose beyond 56.2 prior and 52.1 expected to 56.4.

United States

  • Chicago Purchasing Manufacturing Index: The index came below expectations (59) in November: Actual (58.2).
  • Pending Home Sales: A leading indicator of housing activity contracted by 1.1%. Contract activity was mixed among the four major U.S. regions, with the only positive month-over-month growth happening in the South, although each region achieved year-over-year gains in pending home sales transactions.

Commodities

Crude oil prices remained in familiar levels ahead of any updates from the OPEC meeting. The oil market has remained pressurised by the uncertainty on the demand outlook and a supply glut. The broad optimism in the markets triggered largely by vaccine updates and hopes that the pandemic may soon be under control, has been providing support to a fundamentally battered energy market. 

Crude oil prices have firmed to the upside in the last few weeks in the anticipation that the global activities might be back to a new normal with the vaccine. The commitment of the OPEC members and its non-OPEC allies is crucial for the oil market. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $45.05 and $47.59 respectively. 

For the chart of the day, Adam Taylor takes a look at the USOIL – Can Oil Prices Reach Pre-Covid Levels?

Goldman Sachs has recently called for the value of crude oil to increase to roughly $65 per barrel as we head into 2021, and the latest charts appear to echo this sentiment of a global rebalancing in this market. Naturally, much of these moves rely on the promise of a Covid vaccine and some seasonal cues. In today’s Chart of The Day, we use the point and figure method to help uncover potential supply and demand areas and see where price action may occur.

The chart above highlights the bullish support line currently at the forefront of oil moves. Since the low of zero, the price has incrementally risen, generating a steady accumulation period before the latest bullish breakout above $43.00. This breakout also forms part of a bullish flag formation that suggests additional moves to the upside in the coming months.

Using a point a figure calculation to locate a potential upside target, we find a vertical count from the $1.00 low provides us with $59.00 as a possible destination for the commodity. Not too far off from what analysts over at Goldman are presenting.

It appears many analysts are calling for oil to return to pre-covid prices as we expect increased demand once both a vaccine becomes readily available winter months in the northern hemisphere typically drive energy markets to higher levels. Of course, there are no guarantees that either of these scenarios will occur or that demand follows historical trends for this time of year.

For the time being, global oil prices remain stable, with bullish sentiment continuing to trickle through into many of the technical indicators.

Gold

After breaking below the $1,800 mark to its lowest point in four months, the precious metal is seen trading within a range. As of writing, the XAUUSD pair was trading around $1,776. 

By Deepta Bolaky
 @DeeptaGOMarkets

Key upcoming events

  • Commonwealth Bank Manufacturing PMI, Building Permits, RBA Interest Rate Decision & Rate Statement (Australia)
  • Jobs/Applicants Ration and Unemployment Rate (Japan)
  • Gross Domestic Product (Switzerland)
  • EcoFin Meeting and CPI (Eurozone)
  • Unemployment Rate, Unemployment Change and Markit Manufacturing PMI (Germany)
  • Markit Manufacturing PMI (UK)
  • OPEC Meeting, Markit Manufacturing PMI, ISM Manufacturing PMI, Employment Index, Prices Paid, New Orders Index and Fed’s Chair Powell testimony (US)
  • GDP and Markit Manufacturing PMI (Canada)
Wednesday, 02 December 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 9.869 0.351 0.035 0.722 0 0.6
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 3.495 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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