Risk Off As Covid Fears Overshadow Vaccine Elation
Fiona Cincotta November 13, 2020 2:11 AM
European markets ae pointing to a sharply lower open on the bell, following on from a steep sell off on Wall Street overnight.
European markets ae pointing to a sharply lower open on the bell, following on from a steep sell off on Wall Street overnight. The vaccine euphoria of earlier in the week has well and truly faded, replaced by concerns over record high covid cases and more extensive lockdown conditions.
Covid cases hit record highs
Risk aversion is dominating at the end of the week with investors pulling out of riskier assets such as stocks whilst flows into safe havens such as gold are on the rise. The rotation into value stocks and out of tech has been stopped in its tracks, with Nasdaq futures outperforming. This is a complete turnaround from earlier in the week when news of Pfizer’s vaccine candidate being 90% effective sent stocks surging to 8-month highs but dragged on US big tech.
Looking ahead, Eurozone Q3 GDP reading is expected to confirm a record 12.7% rebound. Although with France & Germany, the Eurozone’s two largest economies back in lockdown and Italy considering it, a double dip recession is almost certain, making Q3 numbers dated already.
Support can be seen at the 200 sma (6050) prior to 100 sma (6000). A fall below these levels & the descending trendline at 5950 could negate the current bullish break higher and see the FTSE resume its longer term bearish trend. On the flip side, resistance can be seen at 6500 June high.
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