Global stocks take a hop on upbeat news about vaccines
An electric car charges on a street recharging port in London on Wednesday. Britain says it will ban the sale of new gasoline and diesel cars by 2030. Associated Press
Traders have this month been encouraged by announcements of progress toward possible vaccines and on Wednesday Pfizer said that the one it is developing is even more effective than first announced.
The statement comes as the company is preparing within days to formally ask US regulators to allow emergency use of the vaccine.
Investors are weighing optimism about vaccines against news that the infection numbers in the United States and Europe are high and rising in many cases, posing a threat to businesses.
On Wall Street, futures for the benchmark S&P 500 index and Dow Jones Industrial Average were up 0.3% and 0.5%.
In Europe, the FTSE 100 in London rose 0.3% to 6,374 and the DAX in Frankfurt gained 0.3% to 13,165. The CAC 40 in Paris rose 0.4% to 5,506.
On Tuesday, markets took a hit after new data show U.S. retail sales growth fell to 0.3% in October from September’s 1.6%. The figure fell short of forecasts for 0.5% growth.
That was “a warning shot that COVID-19 is still with us, and its effects will not miraculously disappear overnight,” Jeffrey Halley of Oanda said in a report. The chairman of the Federal Reserve, Jerome Powell, said the American economy has a “long way to go” before it returns to pre-pandemic levels.
Powell warned the “next few months may be very challenging.” He said the Fed is committed to supporting a recovery.
In Asia, the Shanghai Composite Index gained 0.2% to 3,347.30 and the Hang Seng in Hong Kong added 0.5% to 26,544.29. The Nikkei 225 in Tokyo lost 1.1% to 25,728.14 after October exports declined 0.2% from a year earlier.
The Kospi in Seoul advanced 0.3% to 2,545.64 and Sydney’s S&P-ASX 200 added 0.4% to 6,531.10. India’s Sensex gained 0.4% to 44,127.85.
Among the concerns for investors is whether the economy will get more stimulus. In Europe, a coronavirus relief package is being held up by a diplomatic dispute between Hungary and Poland and several other major EU countries.
In the U.S., extra unemployment benefits that helped to support consumer spending have expired. Progress on a possible new aid plan in Congress is slow.
“The concern is that people will lose confidence in efforts to control the pandemic,” Powell said. “We’re seeing signs of that already.”
In energy markets, benchmark US crude rose 76 cents to $42.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents on Tuesday to $41.43. Brent crude, the standard for pricing international oils, gained 82 cents to $44.57 per barrel in London. It lost 7 cents the previous session to $43.75.
The dollar declined to 103.97 yen from Tuesday’s 104.21 yen. The euro rose to $1.1869 from $1.1864.
Oil prices firmed on Wednesday as hopes that producer group Opec and its allies will delay a planned increase in oil output to offset a bigger than expected build in U.S. crude inventories.
Brent crude futures rose 53 cents, or 1.2%, to $44.28 a barrel by 1046 GMT, while U.S. West Texas Intermediate crude gained 44 cents, or 1.1%, to $41.87.
“Oil prices today are modestly rising on hopes that OPEC+ will decide to postpone its planned production increase in January and on the latest vaccine euphoria,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
U.S. companies Pfizer and Moderna have raised hopes of containing the COVID-19 pandemic with reports of high success rates for their coronavirus vaccines.
To tackle weaker energy demand as the pandemic continues its second wave, Saudi Arabia has called on fellow members of the Opec+ group - comprising the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia - to be flexible in responding to oil market needs.
Opec+ held a meeting on Tuesday that made no formal recommendation ahead of the group’s full ministerial meeting on Nov. 30 and Dec. 1 to discuss policy.
Members of OPEC+ are leaning towards delaying a previously agreed plan to boost output in the new year by 2 million barrels per day (bpd), or 2% of global demand, sources told Reuters this week. They are considering options to delay the increase by three or six months.
Both benchmarks were down earlier in the session after the American Petroleum Institute (API) said on Tuesday that U.S. crude stockpiles rose by 4.2 million barrels last week, well above expectations of a build of 1.7 million barrels in a Reuters poll of analysts. .
“The dismal crude data was countered by the 5 million barrel drawdown in distillate stocks whilse gasoline inventories built a tad,” said Tamas Varga of oil brokerage PVM.
