Morning Minutes 1/9/2020

Morning Minutes

Stocks and Commodities Soar On Pfizer Vaccine and US Election News

November 9, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Moderate overnight gains in the markets have morphed into explosive gains this morning after Pfizer announced that its COVID vaccine candidate was 90% effective in a Phase 3 clinical trial. While Pfizer is up 13.6% in premarket trading wider action in the markets suggest that investors may be seeing this as a potentially game-changing announcement as stocks in some of the sectors that had been particularly hammered by COVID have been soaring including United Airlines (up 19.5% premarket), Royal Caribbean Cruises (up 21.1% premarket) and MGM Resorts (up 17.2%) premarket.

Investors had already been in a positive mood heading into the new trading week after Joe Biden won enough states to go over the top and become the presumptive winner in the US Presidential election. Notwithstanding the potential for recounts, runoffs and legal challenges, the market appears happy with the prospect of a Biden presidency with a gridlocked Congress making it difficult to move very far away from the middle.

Looking more broadly, premarket trading this morning finds US index futures soaring, with Dow futures gaining over 1500 points or 5.5%, S&P futures up 4.1% and NASDAQ futures up 0.5%. European markets are also strong today with Frankfurt, London, Paris and Milan posting gains of 4.5% to 7.5%. Commodities are also on fire today with investors apparently speculating that a COVID vaccine could help to accelerate the global economic recovery and boost energy demand. WIT is up 10.7% and has cleared $40.00/bbl, while Brent Crude is up 9.8%. Copper is up 1.3%.

In another sign that “risk-on” mode has kicked in for world markets. Gold and Silver have turned sharply southward this morning, nosediving 3.2% and 4.2% respectively. In paper currencies, the defensive Japanese Yen is getting crushed, diving 1.5% against the US Dollar, while the Euro and Pound are steady. The Oil-sensitive Canadian Dollar has taken flight, gaining 0.8% against the greenback.

We’re moving into the latter stages of earnings season, with a ton of results scheduled from small cap companies, but only a few results due from the big caps. McDonalds beat the street today ($2.22 vs street $1.90) as same store sales in the US increased by 4.6%.

It’s a much quieter week for scheduled economic news headlined by US inflation numbers later in the week. FOMC member Lael Brainard is scheduled to speak on Tuesday which could be of interest to markets as she is reportedly a candidate for a cabinet position in a potential Biden administration. Other companies of note set to report this week include: Beyond Meat this afternoon, Manulife Financial on Wednesday, plus Cisco Systems, Walt Disney and Loblaws on Thursday.

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