Morning Briefing: Market volatility over vaccine developments

Vrasidas Neofytou
Head of Investment Research

See all articles
Morning Briefing: Market volatility over vaccine developments

Global financial markets fell 1% on Tuesday, giving back some of the massive gains from the previous session, as investors raised concerns about the trial results for a potential coronavirus vaccine from Moderna. Gold and Silver prices extended their recent uptrend momentum, while the US dollar continued its downtrend.


Coronavirus Update:

Global cases: Around 4.9 million
Global deaths: More than 323,000
Top 5 countries: United States (More than 1.5 million), Russia (299,941), Brazil (271,885), United Kingdom (250,138), Spain (232,037).


Market Reaction:

Market volatility has surged since the start of the week, as investors feel excited over the prospect of a virus vaccine, while some remain concerned for a second wave of infections as global markets reopen.

Fig.01: Dow Jones index, 2-hour chart

US stock markets opened the week with very strong gains of 4%, cheering the vaccine positive developments from Moderna biotech company. However, the vaccine-related rally lost some steam yesterday, after a STAT News report raised concerns about the trial results for a potential coronavirus vaccine from Moderna. Shares of the biotechnology company dropped 10% together with the rest of the market, as the Dow Jones index lost 400 points or 1.6% to close at 24.206.

Asian markets were mixed on Wednesday morning trade, following the overnight losses from Wall Street. Nikkei and Kospi indices led the gains with 1%, while Chinese indices fell 0.5%.


Precious metals:

Gold price surged 1% yesterday, approaching once again the key resistance level of $1.750/oz. Silver price extended recent gains towards 2-months high of $17.60/oz, while Palladium trades just above the support level of $2.000/oz.

Fig.02: Silver price, Daily chart

Precious metals gained support from the US dollar’s weakness, the monetary stimulus packages, zero interest rates and stock market volatility.


Crude Oil:

Crude oil prices rose 1% this morning supported from the ongoing supply cuts from OPEC, Russia, and US Shale producers. Furthermore, oil demand is gradually recovering as global economies reopen and economic activity restarts. WTI and Brent crude prices trade near monthly highs of $32 and $35 per barrel, respectively.


Forex Market:

Euro currency climbed near 1.10 against the US dollar, after France and Germany proposed a 500-billion-euro coronavirus bond program to support an economic recovery in the EU.

Fig.03: EUR/USD, 2-hour chart

The US dollar has been the weakest currency across the board this week. The vaccine optimism combined with the improved sentiment, have reduced the safe-haven demand for the greenback.

The DXY-dollar’s index fell at 99.40 this morning, in response to the willingness of the Federal Reserve to extend its monetary stimulus to support the economy.


Economic Calendar for May 20, 2020 (GMT+ 3:00):

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

Read our detailed Marketing Communication Disclaimer

SHARE

CONNECT WITH OUR TEAM

Explore the ways in which we can help you achieve your investment goals.

OUR PARTNERS
bdo

EXTERNAL AUDITOR

ey

LEGAL ADVISOR

lgt

CUSTODIAN BANK

efg

APPROVED PARTNER

Raiffeisen

DEPOSITORY BANK

Prime Fund

GROUP MEMBER