Following November’s U.S. election and recent vaccine news form Pfizer and Moderna, markets shot up, with the DJIA hitting a new all time high today (reached 29,951 earlier today).
“For stocks, this is likely the best of both worlds,” said Joyce Chang, head of global research at JPMorgan Securities. “A GOP senate majority should ensure that Trump’s pro-business policies stay intact. Under Biden, additional tariffs that fueled the trade war are unlikely to materialize.” In summary, less uncertainty and constant low corporate taxes.
Stocks that had struggled due to lock-down/restrictive measures related to the virus soared; cruise operators, airlines, hotels, amusement park/movie theater operators and casinos were among the early session’s top “lock- down” performers.
Airline stocks also surged, with Boeing closing up over 8%, Carnival up nearly 10%, and MGM up 2.4%.
Aerospace stocks are also surging, with Airbus, Safran and Rolls-Royce all up 5% or higher.
Bank stocks have had a great last few weeks, with JPM up 17% since early November, while MS has increased by 4%, and Goldman has jumped 22%.
At the same time, stay at home stocks such as Peloton, Netflix and Zoom sank, with Zoom bearing the brunt of the damage having lost over 11%. The news also hammered companies that had boomed amid massive demand for COVID-19 tests: QDEL sank 14% as QGEN tumbled 12%; among smaller companies trading on lighter volume were GNMK -6.1%, FLDM -2.8%.
Looking into December and early 2021, Bloomberg notes that there’s precedence for the market’s gains to continue. Since 2000, every time the S&P 500 was higher heading into Election Day, November and December came in green, too.
The first years of presidential terms have also been good ones of late. Since 1986, according to Leuthold Group data, they’ve seen average gains of 18.6%.
On the vaccine news (Pfizer) WTI Crude jumped 8%, closing at $41.48 today.
Safe havens such as gold and silver were hosed, falling over 2%.
Aside from the Pfizer and Moderna COVID-19 vaccine highlights, here are some of the other top overnight news from Bloomberg:
- Biden is largely ignoring Trump’s efforts to undermine his victory. The president-elect plans to unveil on Monday his transition team’s coronavirus task force, a step toward fulfilling his central campaign promise: He will make containing the pandemic his first priority
- Republican congressional leaders still wary of crossing President Donald Trump are holding back from acknowledging Democrat Joe Biden’s victory in the 2020 presidential race
- Joe Biden won the presidency promising to bring Americans together. But now his administration is sure to come under pressure from some Democrats to risk exacerbating divisions by investigating and prosecuting Donald Trump
- Germany is seeking to mend transatlantic trade relations and is mulling a more conciliatory approach that would see the European Union delay tariffs set to hit $4 billion of American products as soon as Tuesday, according to a senior official familiar with the government’s thinking
- Unlike Donald Trump, whom Chinese officials had little knowledge of before he took office, Joe Biden is well known in Beijing. But that history is unlikely to quickly repair a relationship between the global powers that has fundamentally changed over the past four years
- France’s economy will take a smaller hit from the new lockdown to contain the spread of Covid-19 than it did during the tighter restrictions on activity earlier this year, according to the country’s central bank
- Over the course of the next seven days, the U.K. premier needs to deliver a trade deal with the EU or risk a chaotic and economically damaging rupture, and avoid a rift with U.S. President-elect Joe Biden over the U.K.’s controversial Brexit laws
- The signing of the biggest free trade deal ever among fifteen Asia Pacific Nations, called the Regional Comprehensive Economic Partnership, or RCEP, t was signed virtually during the annual summit of the 10-nation Association of Southeast Asian Nations (ASEAN), and effectively establishes the world’s largest trading block that is expected to encompass almost one-third of all global economic activity, crucially without the United States.
- Dominic Cummings, Boris Johnson’s top advisor has left his post at 10 Downing. Earlier this year, Cummings violated self-isolation prtocols.
- The U.K.’s chief Brexit negotiator, David Frost, said Sunday before renewed talks that a trade deal with the European Union may not succeed before year end, but he was still hopeful of a resolution. The two sides say any post-Brexit deal must be agreed upon by mid-November in time for it to be ratified by year-end. A Brexit trade deal could be delayed until December 28th.
DB’s Jim Reid with a recap of the past weekend’s plethora of news:
So barring an extraordinary series of events Joe Biden will be the next President of the US. Not that it matters in the great scheme of things but we’ve been debating whether this was a close election or not. It really depends on how you look at it. In terms of the popular vote, Joe Biden won more votes than any candidate in history and will likely win by the second most decisive result since 2000. He leads by 3pp currently with this likely to grow in the coming days, with Nate Silver predicting 4.3pp over the weekend. However in the end the election could have been tied at 269 (and a Congress likely to be weighted towards anointing Trump) without a combined c.55,000 votes in Arizona, Wisconsin and Georgia. It’s largely irrelevant but interesting nevertheless.
Attention will still remain on the remaining Senate races. The Democrats have gained a net of one seat so far, and it looks likely that a pair of run-off elections in Georgia on January 5th will determine which party controls the Senate over the next two years. The most likely outcome though is a divided government as the Dems would need to win both against current expectations.
The market last week stuck to the normal script post a close election where the market rallies regardless of who wins rather than one where micro analysis of post election policies are used to predict what happens next. Who needs us analysts?
The S&P 500 rallied +7.32% last week (-0.03% Friday), while the VIX fell -13.2pts to 24.9, its lowest level since August. It was the S&P’s best week since early April when the index was coming back from the pandemic lows.
Works Cited:
https://ca.finance.yahoo.com/news/brexit-trade-deal-may-not-144605917.html