Dow average climbs to record on vaccine; oil gains

US stocks rose to records after positive news on a Covid-19 vaccine sparked a rally in shares tied to an economic reopening while stay-at-home tech companies lagged behind. The S&P 500 rose by 1.16% to 3,626.91 while Dow Jones was up 470.63 points (1.6%) to 29,950.44.

Biden says containing pandemic is vital to economic recovery

President-elect Joe Biden promised that his administration would fight the coronavirus pandemic and spur an economic recovery in 2021 but also urged Congress to pass a stimulus bill this year to deliver immediate relief to struggling Americans. Biden said lawmakers should approve a bill like the $2.2 trillion HEROES Act that the House of Representatives passed, as his team begins to work with business and labor to make plans for combating the pandemic-related downturn once he takes office.

Fed’s Clarida has more confidence vaccines will support recovery

Federal Reserve Vice Chairman Richard Clarida said prospects for the economic recovery were brightening due to progress in the development of vaccines to fight the Covid-19 pandemic. “The news has been very good to have now two successful trials with above 90% efficacy,” Clarida said. His baseline forecast for 2021 always included the expectation for a vaccine, but now he feels more confident about that assessment.

ECB emphasizes next stimulus focused on bond-buying and loans

European Central Bank policy makers signaled that they’re coalescing around emergency asset purchases and long-term bank loans as their main options for boosting monetary stimulus next month. Bank of Spain Governor Executive Board member and Vice President all echoed President Lagarde’s signal that the Pandemic Emergency Purchase Program and an ultra-cheap credit facility for lenders are the key candidates to be expanded or extended when the institution meets in December.

German economy may shrink after virus flare-up, Bundesbank says

The German economy could stagnate or even shrink in the final three months of the year after a spike in coronavirus infections forced the government to impose new curbs on public life, the Bundesbank said. While domestic restrictions are weaker and more focused on hospitality and leisure activities than in the spring, exports are suffering from a resurgence of the virus across Europe, the institution said in its monthly report.

China’s strengthening recovery cements status as global outlier

China’s economic rebound gathered pace in October, cementing the nation’s status as the only major economy tipped to grow this year. Industrial output rose 6.9% in October from a year earlier, the National Bureau of Statistics said, higher than the 6.7% median estimate in a Bloomberg survey of economists. Retail sales growth accelerated to 4.3% from 3.3% in September, though missing expectations for a 5% increase.

Thai economic slide slows as stimulus counters virus impact

Thailand’s economy improved in the third quarter after the government implemented a series of stimulus measures and eased restrictions on movement as it brought the country’s Covid-19 outbreak largely under control. GDP shrank 6.4% from a year ago, the National Economic and Social Development Council said, recovering from the prior quarter’s revised 12.1% contraction at the peak of the outbreak.

Oil climbs with vaccine optimism lifting broader markets

Oil gained the most in a week amid signals a Covid-19 vaccine is highly effective against the coronavirus, boosting optimism that an uptick in demand may be nearing. Brent crude for January settlement rose US$1.04 to US$43.82 per barrel.

Source: Affin Hwang Research - 17 Nov 2020