Global stock markets soared on indications that the BioNTech/Pfizer vaccine was 90% effective in protecting against Covid-19. Travel and hospitality stocks were among the strongest gainers, along with financials and energy companies.

UK

The FTSE 100 surged 6.9% over the week.

As Boris Johnson lost two key advisors – Dominic Cummings and Lee Cain – the Brexit negotiations are entering a critical phase. The UK faces added pressure from President-Elect Joe Biden who refuses to countenance any trade deal with the UK if the UK’s future trade relationship with the EU jeopardises the North Ireland peace deal.

UK GDP grew by a lower than expected 1.1% in September, following a 2.1% monthly gain in August. Over the third quarter, the UK economy increased 15.5%, the fastest since records began. However, the economy remains 9.7% smaller than in the final three months of 2019, the last full quarter before the pandemic hit.

Retail sales rose 4.9% in October, compared to the same period in 2019, boosted by stockpiling ahead of the second national lockdown in England and online festive shopping.

US

The S&P 500 rose 1.7% over the week to reach a fresh record high. However, the Nasdaq suffered a weekly loss as tech stocks remained out of favour amid a broad rotation into ‘value’ stocks as well as those most affected by the Covid-19 crisis.

Joe Biden won Arizona and Georgia, bringing his total number of electoral college votes to 306 – the same number as Donald Trump secured in 2016. While the outgoing president still refused to concede defeat, judges in several key states threw out lawsuits alleging irregularities in the voting process. Attention is now focusing on two run-off elections in Georgia which will decide on whether Democrats will also control the Senate.

As the number of new Covid-19 infections in the US reached a record daily high of 180,000, California, Oregon and Washington advised residents to self-quarantine after travelling out-of-state, while Chicago has issued a 30-day stay-at-home advisory. New York also said it will cap indoor gatherings and impose a curfew on restaurants and bars.

Fund flows into US equity funds totalled $32bn in the week to 11 November, the second-largest weekly commitment in at least two decades, according to the data provider EPFR.

The University of Michigan’s consumer sentiment index unexpectedly fell in November, marking the lowest reading since August.

Europe

The FTSEurofirst 300 rallied 5.0% over the week.

Japan

The Nikkei 225 gained 4.4% over the week.

Pacific Basin

Leaders of 15 Asian nations agreed to one of the largest free-trade deals in history. The Regional Comprehensive Economic Partnership, or RCEP, could add almost $200bn annually to the global economy by 2030 and brings together China, Japan and South Korea for the first time. It was signed by the 10 members of the Association of Southeast Asian Nations – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – and combines them into a single multilateral pact with Australia, China, Japan, New Zealand and South Korea.

Chinese consumer prices rose 0.5% year on year in October, their slowest pace in more than a decade, due in part to weaker pork prices.

Bonds

The 10-year US Treasury yield leapt, reaching an eight-month high of 0.97%, on news of the effectiveness of the BioNTech/Pfizer vaccine. European bond yields reached a two-month high.

Funds that purchase US high-yield bonds took in $3.3bn for the week ending November 11, according to data from EPFR Global, the most in a month. The inflows reversed the nearly $3bn withdrawn in the days around the US presidential election.

Currencies

The Turkish lira rallied strongly amid hopes that the appointment of an economic team led by a new finance minister as potentially leading to a sharp rise in rates.

Commodities

Brent crude rallied to $43 a barrel on hopes that a Covid-19 vaccine would provide a boost to economic demand.

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Image by Angelo Esslinger from Pixabay