Daily Market Commentary 10th November 2020

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Global equity markets and risk appetite surged overnight, while oil prices and bond yields both spiked. The markets were buoyant after the US Presidential election, but the announcement of a 90% success rate for the vaccine from Pfizer and BioNTech, triggered a huge rally in stocks. This could be the greenlight for the global economy and that was reflected in markets. The safe haven of the Yen and USD was sold off in the currency markets, with the EUR jumping above 1.1800, while the GBP approaches 1.3150.

This was extremely good news for all markets boosting global demand, pushing interest rates and oil prices higher. Gold prices plunged. Earlier markets were travelling well, relieved post-US Presidential election, while German trade and current account data, showed strong signs of a recovery in their exports. The trade exposed commodity currencies were beneficiaries of the risk-on trade, with the NZD pushing above 0.6800, while the AUD traded 0.7285.

US equities are now at record highs and markets are jubilant. The roll-out of the vaccine will be important, as the logistics and chronology, will drive the economic recovery. The US election looks to be in the bag for the Democrats although there will be many legal challenges in the courts before the ‘fat lady sings’. The Biden administration has promised higher taxes and regulation, which are both negatives for economic growth, but this has failed to dampen market euphoria.

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