Vaccine Hopes & Earnings Optimism Boost Stocks
Fiona Cincotta July 13, 2020 2:22 PM
Europe points to a strong start boosted by coronavirus treatment hopes and cautious optimism ahead of US earning season, which kicks off this week.
Asian stocks advanced overnight and Europe is looking towards a strong start out of the blocks on Monday, boosted by coronavirus treatment hopes and cautious optimism ahead of US earning season, which kicks off this week.
Drug news lifts sentiment
On Friday, covid drug news sent stocks rallying into the weekend. A study on Remdesivir showed that the drug reduced coronavirus fatalities by 62%. Boosting sentiment further Pfizer and BioNTech announced hat their vaccine could be approved by the FDA as soon as December. A vaccine is the quickest and surest way for the economy to bounce back to pre-corona levels, which explains why the market is so sensitive to any vaccine news flow.
Low bar for earning season
The mood remains upbeat as the new week kicks off and US earning season moves into focus. Given that in April and some of May the US was in full scale lock down, second quarter results bore the brunt of the coronavirus crisis. However, expectations for all except the stay at home stocks are very low. With the bar set so low, the chances of better than forecast results improves.
JP Morgan, Citigroup and Wells Fargo are first to set the scene with Goldman Sachs, Netflix and Johnson & Johnson helping to give further insights as to the coronavirus impact later in the week. Earnings will test optimism which has driven the rebound from March lows.
Rising US covid cases overshadowed
Cautious optimism surrounding earnings season and vaccine hopes is overshadowing rising covid numbers, particularly in the US. On Sunday Florida experienced a record number of daily covid-19 cases, whilst the US continues to see daily increases of around 60,000. Whilst coronavirus cases are surging, the markets aren’t considering the increase to be sufficient to force lockdown restrictions to be placed back on the economy.
Whilst riskier currencies and assets such as equities and are in favour, the US Dollar is once again trading on the back foot as investors shun its safe haven properties.
The economic calendar is quiet today, with just a speech from BoE Andrew Bailey. However, tomorrow sees a sharp pick up in data releases with UK GDP expected to be a highlight. After contracting -20.4% whilst lockdown was in full flow, economic growth is expected to show some signs of recovery in May as lockdown measures started to ease.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.