1. U.S. Futures Rise on Vaccine News; Bonds Decline
More positive news on a Covid-19 vaccine delivered a jolt to U.S. equity futures, sending stocks tied to an economic reopening higher while erasing a rally in tech companies where investors had parked money during the lockdown. S&P 500 contracts jumped alongside those on the Russell 2000 Index after Moderna’s vaccine was shown to be 94.5% effective in a preliminary analysis of a large late-stage clinical trial. The vaccine news adds yet another driver to global stocks after optimism last week spurred a rotation into value and cyclical sectors, and out of more defensive industries.
Futures on the S&P 500 Index climbed 1% as of early morning New York time.
The Stoxx Europe 600 Index rose 1.5%.
The MSCI Asia Pacific Index surged 1.4%.
The MSCI Emerging Market Index rose 1.3%.
2. Moderna Vaccine Found Highly Effective at Preventing Covid
Moderna said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a large late-stage clinical trial. The highly positive readout comes just a week after a similar shot developed by Pfizer and BioNTech was found to be more than 90% effective in an interim analysis. Both shots rely on a technology called messenger RNA that has never been used to build an approved vaccine. A preliminary analysis of data from more than 30,000 volunteers showed Moderna’s vaccine prevented virtually all symptomatic cases of Covid-19.
3. RCEP: Asia-Pacific nations sign the world’s biggest trade pact
China and 14 other countries have agreed to form the world’s largest free trade bloc, encompassing nearly a third of all economic activity, in a deal many in Asia are hoping will help hasten a recovery from the shocks of the coronavirus pandemic. The Regional Comprehensive Economic Partnership, or RCEP, was signed virtually on Sunday on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations (ASEAN). In the online ceremony, leaders of RCEP countries took turns standing behind their trade ministers who, one by one, signed copies of the agreement, which they then showed triumphantly to the cameras. It will account for 30% of the global economy, 30% of the global population and reach 220 crore consumers. RCEP will help reduce or remove tariffs on industrial and agricultural products and set out rules for data transmission.
Officials said the accord leaves the door open for India, which dropped out due to fierce domestic opposition to its market-opening requirements, to rejoin the bloc.
4. S&P hits all-time closing high as Biden says no US shutdown
Wall Street jumped as encouraging earnings stoked risk appetite and United States President-elect Joe Biden’s COVID advisory team said it was not considering a nationwide shutdown, but oil prices slid as Libyan output rose and investors worried the resurgent pandemic could hurt global demand. The bellwether S&P 500 and the small-cap Russell 2000 both reached record closing highs.
5. Crackdowns Everywhere Show Xi Strengthening Party Grip on China
The past few weeks have shown that Chinese President Xi Jinping can move extremely fast when he hones in on long-term threats to the Communist Party. And right now they revolve around the convergence of technology, finance and Hong Kong. Since unveiling a goal last month to double the size of the economy by 2035, China has embarked on a sweeping crackdown of some of its most valuable companies. The shock suspension of Ant Group’s $35 billion IPO was quickly followed by more anti-monopoly rules to rein in former tech darlings Tencent and Alibaba, leading to a $290 billion equity sell-off last week. At the same time, he’s moved to further snuff out any opposition in Hong Kong’s legislature, the most democratic institution under Chinese rule. The moves reflect an increased urgency among China’s top leaders to stem growing threats to their rule, whether it be a 2008-style financial crisis, a colour revolution or a new class of billionaires becoming more powerful by the day. And while some of the measures are prudent steps to de-risk the economy, one common thread runs through them all: The need for the Communist Party to control all the levers of power.
6. Hong Kong’s Exchange Unveils Proposal to Speed Up IPO Process
Hong Kong’s stock exchange unveiled a proposal to shorten the time gap between IPO pricing and trading to as little as one day, a move that will bring one of the world’s busiest listing venues in line with rival bourses. Hong Kong Exchanges & Clearing Ltd. proposed an electronic platform called FINI (Fast Interface for New Issuance) that would allow IPO market participants, advisers and regulators to interact digitally. The web-based service will shorten the time gap between pricing and trading to as little as one business day from the current average of five days, reducing market risk.
7. Morgan Stanley Says Go Risk-On and ‘Trust the Recovery’ in 2021
Morgan Stanley strategists said an expected “V-shaped” economic recovery, greater clarity on Covid-19 vaccines and continued policy support offer a favourable environment for stocks and credit next year. Their outlook for 2021 recommended investors overweight equities and corporate bonds against cash and government debt, and sell the U.S. dollar. Volatility is set to decline, and investors should be “patient” in commodity markets. “This global recovery is sustainable, synchronous and supported by policy, following much of the ‘normal’ post-recession playbook,” said the strategists, “Keep the faith, trust the recovery.”
8. Macron Says EU Can’t Go Back to Relying on U.S. Under Biden
French President Emmanuel Macron said the European Union must push on with its efforts to develop the capacity to act independently in technology, international finance and defense, even after President-elect Joe Biden takes over in the U.S. Macron said that EU leaders mustn’t let the defeat of Donald Trump persuade them that they can return to relying on the U.S. to underwrite European security and to defend the bloc’s interests. As examples of EU vulnerabilities, Macron pointed to recent developments in cloud computing services that could leave European data subject to U.S. law and the tensions over the Iran nuclear accord, in which the Trump administration had leverage over the Europeans because of the dollar’s status as a global reserve currency.
9. Over 90% of U.K. Workers Lack Skills Needed in Next Decade
More than 90% of the U.K. workforce lack all the skills they need to do their job well in 2030, underscoring the challenge as the country seeks to reshape its economy following Covid-19 and Brexit. About 3 crore workers need to upskill or retrain, according to an analysis published by McKinsey. 9 out of 10 employers already say they are struggling to recruit people with the skills they need. Skills are climbing up the U.K. agenda as workers seek to remain relevant amid rising unemployment in the wake of the coronavirus pandemic and companies adapt to new demands. Many Britons have not undertaken training in years, with a government survey showing just 62% of employees received any form of workplace instruction — even health and safety or new hire inductions — in 2017. Almost half of the people in the lowest socioeconomic group have had none since they left school.
10. The American Consumer Is Flush With Cash After Paying Down Debt
Eight months into the pandemic, Americans’ household finances are in the best shape in decades. It’s a seemingly incongruous thought, what with the widespread business lockdowns earlier in the year and a coinciding surge in unemployment — and it certainly doesn’t apply to all families equally. But it points to just how strong the U.S. economy was going into the virus outbreak, and how powerful the combined monetary and fiscal response was from the Federal Reserve, Congress and the Trump administration. Record-low mortgage rates, reflecting the ultra-easy Fed policy, have prompted a steady wave of refinancing and allowed homeowners to reduce monthly payments or tap equity. Americans are also holding more cash, helped in part by stimulus from the government.