Global stock rally tempers after virus vaccine euphoria

Bloomberg

The global rally in stocks paused on Tuesday while haven assets found support amid concern that a promising coronavirus vaccine study still has hurdles to clear.
The Stoxx Europe 600 Index fluctuated, with banks leading gains and tech stocks the biggest decliners, the day after news from Pfizer Inc and BioNTech SE about their anti-viral treatment sent global stock markets soaring.
US equity futures were mixed, with contracts on the tech-heavy Nasdaq 100 Index underperforming those on the main gauge. Treasuries were steady as investors focused on the risks that fresh US fiscal stimulus may now be less than expected.
After their knee-jerk reaction on November 09, investors are reappraising how much further they might switch out of havens into risk assets, and into shares that were punished by the pandemic for their alignment with economic growth.
While many questions remain about virus roll-outs, the euphoria over their progress has driven US junk-bond yields to record lows and prompted a shift in strategies to reflect the new landscape.
“Investors need to diversify towards more cyclical parts of the market that have lagged behind in 2020, and away from big tech and the primary stay-at-home beneficiaries,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. The next leg up in stocks will be driven by more freedom of movement and “an end to US political uncertainty” after the election.
Separate from the Pfizer trial, an antibody therapy from Eli Lilly & Co was granted emergency-use authorisation in the US. But the final-stage trial of a frontrunner Chinese vaccine candidate was halted in Brazil due to a serious adverse event. Experts cautioned questions remain to be answered before an inoculation can be rolled out.
Surging coronavirus cases and legal challenges to the US election outcome also weighed on sentiment. The US surpassed 10 million Covid-19 cases on November 09 and
appeared poised to hit record hospitalisations later this week.
President-elect Joe Biden warned the nation faced a “dark winter” and announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to contain the outbreak.
Meanwhile, finance ministers and central bankers from the Group of 20 will hold an
extraordinary meeting on Friday to discuss bolder action to help poor nations struggling to repay their debts.
The Stoxx Europe 600 Index was little changed in London and futures on the S&P 500 Index were little changed.
While Nasdaq 100 Index futures dipped 0.4%, the MSCI Asia Pacific Index gained 0.6%.
The Bloomberg Dollar Spot Index decreased 0.2% and the British pound gained 0.3% to $1.3212.
While the Japanese yen strengthened 0.3% to 105.09 per dollar, the Mexican peso strengthened 0.1% to 20.3138 per dollar.
The yield on 10-year Treasuries increased less than one basis point to 0.93% and the yield on 30-year Treasuries
declined one basis point to 1.70%.
While Germany’s 10-year yield decreased less than one basis point to -0.51%, Britain’s 10-year yield was unchanged at 0.372%.
While West Texas Intermediate crude increased 1% to $40.71 a barrel, gold strengthened 1.3% to $1,887.45 an ounce.
LME aluminum rises 0.4% to $1,901.50 per metric ton and iron ore climbed 0.7% to $118.86 per metric ton.