EU Stoxx 50, Coronavirus Vaccine, European Central Bank – Talking Points:
- It was a mixed day of trade during the APAC session as investors mulled vaccine developments.
- Scaled-back vaccine production may weight on European equity markets.
- EU Stoxx 50 at risk of near-term pullback as price challenges key resistance.
Asia-Pacific Recap
It was a mixed day of trade during the Asia-Pacific session as investors digested vaccine developments and awaited the release of the US non-farm payrolls report.
Australia’s ASX 200 index rose 0.28% after retails sales figures for the month of October rose for the first time in 3 months, while Japan’s Nikkei 225 slipped 0.22% lower.
In FX markets, the risk-sensitive AUD and NZD lost ground against their major counterparts alongside the haven-linked USD and JPY, while the commodity-linked NOK largely outperformed.
Crude oil prices jumped over 1% after OPEC+ decided to slash output by 7.2 million barrels-per-day from the start of the next year.
Looking ahead, US non-farm payrolls for the month of November headline the economic docket alongside Canadian unemployment data.
DailyFX Economic Calendar
Vaccine Hiccup May Weigh on European Equities
European equity markets have stormed higher since falling to multi-month lows at the start of November, buoyed by positive vaccine news and the prospect of additional monetary support from the European Central Bank.
However, news that Pfizer has scaled back its coronavirus vaccine production targets for this year may weigh on regional asset prices in the near term. The firm had originally estimated that it could manufacture up to 100 million shots in 2021 but supply-chain difficulties have cut that in half.
Source – Financial Times
That being said, Pfizer spokeswoman Amy Rose stated that with doses “being made at a rapid pace, we are confident in our ability to supply 1.3 billion doses by the end of 2021”. Nevertheless, the reduction in supply may concern market participants and calls into question the estimates of other prominent vaccine producers.
After all, it is going to take an unprecedented manufacturing response to supply enough doses to end the pandemic and further delays would only prolong the global economic recovery. This reality could ease global growth bets in the coming days and lead to a discounting of the benchmark EU Stoxx 50.
ECB Monetary Policy Easing to Limit Downside
However, expectations of further monetary easing may limit the potential downside for regional risk assets.
The minutes of the ECB’s November policy meeting stated that “members widely agreed that, given the sharper slowdown in growth momentum and the weakening of underlying inflation dynamics compared with what had previously been expected, it would be warranted to recalibrate the monetary policy instruments in December”.
The central bank is expected to expand its…
Read More: EU Stoxx 50 Index at Risk on Vaccine Hiccup, ECB Tempering Expectations