Markets mixed amid positive vaccine news and rising Covid 19 cases

U.S.

The major indexes recorded new highs on Wednesday but failed to remain in positive territory and  pulled back by weekend. The Russell 2000 Index outpeformed the S&P 500 Index for the fifth consecutive week. The Dow Jones Industrial Average lost 0.57%, the S&P 500 closed 0.96% down and the Nasdaq Composite Index was also in the red with -0.69% for the week. The energy sector outperformed as oil prices crossed USD 50 per barrel for the first time since the outbreak of the pandemic. Information technology and real estate shares underperformed.

The U.S. Food and Drug Administration (FDA) released data on Tuesday confirming that the Pfizer/BioNTech vaccine was 95% effective, boosting positive investing sentiment on the markets. AstraZeneca and Johnson & Johnson also made progress on developing vaccines, adding to investors´ appetite.

EU

European shares fell as coronavirus cases kept rising in key economies and the outcome of a post-Brexit trade deal was still unclear . The pan-European STOXX Europe 600 Index ended the week about 1.00% lower, while Germany’s DAX Index fell 1.39%, France’s CAC 40 declined 1.81%, and Italy’s FTSE MIB tumbled 2.15%. The UK’s FTSE 100 Index was flat.

Core eurozone bond yields fell amid growing concerns about the possibility of a no-deal Brexit and another injection of stimulus by the European Central Bank (ECB).  Optimism related to coronavirus vaccines and expectations of further U.S. fiscal stimulus moderated the overall fall. UK gilt yields also declined on receding hopes of a post-Brexit deal and Bank of England Governor Andrew Bailey hinting that the central bank could implement negative interest rates.

Japan

Japanese stocks closed mixed for the week. The Nikkei 225 Stock Average declined 0.4% (99 points) and closed at 26,652.52. For the year-to-date period, the benchmark is ahead 12.7%. The large-cap TOPIX Index and the TOPIX Small Index, broader measures of Japanese stock market performance, recorded weekly gains. The yen was little changed versus the U.S. dollar and traded near JPY 104 on Friday.

Prime Minister Yoshihide Suga announced that the Japanese government was preparing a third stimulus package totaling JPY 73.6 trillion (USD 706 billion) to help the economy, hit by the impact of the coronavirus. Approximately JPY 52 trillion of the stimulus will be used to support structural economic changes, and the balance will go to curb the latest outbreak and support disaster management.

China

China equities fell as tensions with the U.S. grew , after a second major index provider removed some Chinese companies from its benchmarks following a Trump administration executive order. The CSI 300 Index sank 3.5%, its biggest weekly drop since September, and the Shanghai Composite Index shed 2.8%. Sentiment weakened after S&P Dow Jones Indices (S&P DJI) said it would remove 21 Chinese companies from its global stock and bond benchmarks after the U.S. Defense Department earlier this year designated the companies as having ties to China’s military. The move by S&P DJI followed a similar decision by FTSE Russell the previous week and comes as other index providers, including JP Morgan, MSCI, and Nasdaq, are deliberating whether to do the same.