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US equities peaked after flash PMI readings showed the recovery gained further momentum as hiring rose to all-time highs, dampening the prospects for significant fiscal support from Congress. Commercial activity remained strong as news business growth rose to a 30-month high. Domestic demand is driving the recovery and this will complicate the argument for targeting massive stimulus to support the economy.
Prior to the PMI flash readings, Wall Street focused on the third consecutive Monday with positive vaccine results. The third major discovery of the COVID-19 vaccine came from AstraZeneca-Oxford, with an average efficacy of 70% in protecting against the virus.
AstraZeneca’s COVID vaccine comes in third with an average vaccine efficacy of 70%, a strong but lower number than both Pfizer and Moderna, which have shown that their respective coronavirus vaccines are 95% effective in preventing ‘infection. A dosing regimen for AstraZeneca showed 90% efficacy, but with participants receiving the first half of the dose, followed by a full dose. Fewer than 2,800 received the smaller first dose and this will likely increase scrutiny in an effort to determine the vaccine’s effectiveness once tested on a larger sample.
Yellen
Shares moved slightly higher after reports that former Fed chairman Yellen would become the next Treasury secretary, consolidating dovish leaders behind both fiscal and monetary efforts. It appeared that the finalists all supported a more accommodative stance, so it was no surprise that financial markets did not react strongly.
Oil
Crude oil prices have gotten all the positive bullish catalysts, another COVID vaccine breakthrough, and a possible terrorist act at a Saudi oil distribution station, but have yet to break through the summer highs.
The focus has been on the curve and both WTI and Brent are showing signs of retreating. At the end of last week, WTI crude showed that the first quarter of 2022 showed a relegation and today Brent’s quick month has changed. Pre-pandemic travel is starting to be evaluated and this will keep oil demand healthy.
A lot of oil has been stored and the storage situation means that the possible return of crude to the market is limiting the gains in the oil price. Crude oil prices cannot rise until storage problems are alleviated.
Gold
Gold prices were hit after another coronavirus vaccine posted high-level positive results on Monday, and the flash US PMI data dulled the arguments in favor of massive stimulus. Demand for safe havens came out the window today after virus data showed case growth in the United States is declining dramatically and after commercial activity pushed hiring to all-time highs.
When gold dipped below the $ 1850 level, this opened the door for sellers. The strong dollar coupled with a shortened holiday week made traders doubt their loyalty to gold in the short term. Despite the new COVID restrictions, the US economy still looks solid and the unwinding of bearish bets on the dollar could lead to further gold weakness. If the dollar manages to outperform again, gold could easily plummet to the $ 1800 level. The long-term bullish outlook is still bullish for gold, but the reflation trade will take a long time to take hold.
Cryptos
Ethereum grew more than 17% on November 24th is nearing the end of the commitment, which could allow for a long-awaited upgrade that will allow for faster speeds that could make them compete with the major credit card companies. Bitcoin skeptical investors have embraced Ethereum, which has the most widely used blockchain globally.
Bitcoin has once again failed to reach the $ 1900 level and could see weakness if the dollar continues to make a comeback here. The US economy stubbornly displays continued strength and this is weighing down the stimulus trade that has supported Bitcoin so much.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell stocks. Opinions are the authors; not necessarily that of OANDA Corporation or its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.
With over 20 years of trading experience, Ed Moya is a market analyst with OANDA, producing up-to-date fundamental analysis of geopolitical events and monetary policy around the world. Throughout his career, he has worked with some of the world’s leading forex research departments and brokers, including Global Forex Trading, FX Solutions, and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and company news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is frequently cited in major publications including the Wall Street Journal and The Washington Post. He holds a BA in Economics from Rutgers University.
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US Closure – Strong US PMIs Derail Stimulus Prospects, Biden Selects Yellen, Backwardation, Gold Crumbles, Ethereum Overtakes Bitcoin – 11/23/2020
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US Closure – Mnuchin Becomes Grinch, Fiscal Stimulus Hopes, Pfizer Introduces EUA, Oil Positive Week 3, Gold Rise, Bitcoin $ 19K Eyes – 11/20/2020
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US Closure – Stimulus Talks Resume, Risk Roaring Again, Oil Turns Positive, Gold Lows, Bitcoin Returns to $ 18K – 19/11/2020
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