Vaccine hopes drive stocks higher on ‘Black Monday’ anniversary

In this news, we discuss the Vaccine hopes drive stocks higher on ‘Black Monday’ anniversary.

LONDON (Reuters) – European stocks rebounded on Monday as rising hopes of a coronavirus vaccine by year-end and a US budget package ahead of the election offset concerns over record daily infections in the region.

Wall Street futures rose 0.9% on the 33rd anniversary of the 1987 ‘Black Monday’ crash, when the Dow Jones Industrial Average .DJI fell 22.6% in one day , which equates to a drop of about 6,500 points in the index today.

The blue-chip European stock index .STOXX50 rose 0.8% even as new cases of COVID-19 rose by more than 150,000 per day in Europe. Parts of the UK have been locked out and France has imposed curfews.

These concerns and the lack of a breakthrough in the Brexit deadlock have failed to dampen investor risk appetite, after U.S. House of Commons Speaker Nancy Pelosi said on Sunday she was optimistic on a coronavirus relief deal ahead of polling day.

Stimulating general sentiment, drugmaker Pfizer Inc PFE.N said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.

“A vaccine will be widely available from the second quarter of next year, with markets moving towards the price of economic benefits long before that,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

“The one-off budget negotiations have injected short-term volatility into risky assets, but instead of sitting on the sidelines, we suggest investors consider ways to build long-term positions in these market conditions.”

Investors also welcomed China’s economic recovery in the third quarter, as consumers shook their cautiousness over coronaviruses, although weaker-than-expected overall growth capped stock gains in Asia.

“The third quarter GDP rebound was weaker than expected, but remained a good 4.9% year on year. Data for September beat expectations, suggesting a pickup of momentum towards the latter part of the third quarter, ”said Frances Cheung, head of macro strategy for Asia at Westpac in Singapore.

“The recovery in momentum has been widespread, which bodes well for the outlook for the fourth quarter.”

MSCI’s largest Asia-Pacific stock index outside of Japan MIAPJ0000PUS rose 0.5% for second straight day of gains, declining after third quarter data on China’s gross domestic product .

Separate monthly indicators indicate an expansion of economic activity. Industrial production accelerated 6.9% in September from a year earlier, when analysts looked for a gain of 5.8% from a 5.6% rise in August.

Major risk events later in the week include the minutes of the Australian central bank meeting, the latest US presidential debate and global manufacturing indicators.

Currency action was subdued with the US Dollar = USD stable at 93.696 against a basket of six major currencies. [USD/]

The Euro EUR = traded higher at $ 1.1725 and the British Pound held above a 10-day low on Monday. Investors reduced their holdings as UK and EU negotiators tried to salvage post-Brexit trade talks.

“EU-UK trade talks are flirting with collapse,” ANZ economists said.

“British Prime Minister Johnson said the UK must prepare for a no-deal outcome because the two sides cannot agree on a Canadian-style FTA. Talks resume in London on Monday, but without the political will to change ground, there is little negotiators can do. “

In commodities, Brent LCOc1 futures were flat at $ 42.92 per barrel and US West Texas Intermediate CLC1 crude futures traded at $ 40.91 per barrel.

XAU = spot gold rose 0.6% to $ 1,909.6 an ounce.

Additional reporting by Swati Pandey in Sydney, editing by Larry King

Original © Thomson Reuters

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