Daily analysis

Novox 11.10 Reference of Fx market

COVID-19 VACCINE, NASDAQ 100, ASIA-PACIFIC STOCKS:

US stock markets saw some wild moves on Monday after Pfizer posted encouraging news on its Covid-19 vaccine development. The mRNA technology-based vaccine was tested 90% effective in an initial phase 3 clinical trial. The result is far better than expected, although the actual effective rate may drop as sample size grows. Still, market confidence was invigorated by the news, at least for a while. Crudeoil prices surged more than 8% before erasing some gains in the late trading hours. Gold prices tumbled nearly 5% as expectations for further fiscal and monetary stimulus waned.


An effective and publicly available vaccine will be a game changer, excreting far-reaching impact to the financial markets. If the vaccine is proven safe, effective and being widely used, business activities are likely to resume at a much faster pace, shedding reliance to digital facilities. The rally in energy, financial and industrial sectors alongside a fall in technology shares reflected this expectation. A faster economic recovery and a healthier jobs market may point to less support from fiscal and monetary stimulus in the medium- to long-term.


In the meanwhile, traders might have to gradually adapt their mindset to a world with vaccines, which may see changes in every aspect of our daily life. There could be a solid rebound in demand for travel, tourism, leisure, luxury goods, restaurant and brick-and-mortar retails, while demand for digital services may continue to hold up, but perhaps to a lesser extent.


Investors appeared to have switched out from big tech into the long-underperforming traditional industries last night, kicking off a new chapter of sectoral rotation. How to strike a balance between an escalating pandemic wave against vaccine hopes will likely be a main theme for trading until the end of the year.


Asia-Pacific stocks opened higher, with the Nikkei 225 and ASX 200 index both rising in early Asia hours.


On the macro front, China’s inflation rate, UK employment change and Eurozone ZEW economic sentiment index are among the top events today.


Sector-wise, 7 out of 11 S&P 500 sectors closed in the green, with 72.3% of the index’s constituents ending higher on Monday. Energy (+14.22%), financials (+8.17%) and industrials (+3.34%) were among the best performers, whereas consumer discretionary (-1.59%) and information technology (+0.73%) were lagging behind.


S&P 500 Index Sector Performance 10-11-2020



Technically, the Nasdaq 100 index retraced from a key resistance level at 12,200 (chart below), potentially forming a “Triple Top” pattern. Failing to break 12,200 may open the room for more downside potential with an eye on 11,600 – the 20-Day Simple Moving Average (SMA) line.


Nasdaq 100 Index – Daily Chart


Hang Seng Index Outlook:

Technically, the Hang Seng Index (HSI) erased some earlier gains and looked set to open 300 points higher. An immediate resistance level can be found at 26,840 – the 161.8% Fibonacci extension. The overall trend appears bullish-biased but the index might be vulnerable to a short-term pullback after registering a 9% gain in six trading sessions.


Hang Seng Index – Daily Chart



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