Vaccine hopes drive stocks higher on 'Black Monday' anniversary
World stocks inched higher and the dollar slipped on Monday as rising hopes of a coronavirus vaccine by the end of the year and a U.S. fiscal package before elections offset concern over record daily infections in Europe. Wall Street futures rose 0.8% on the 33rd anniversary of the 1987 "Black Monday" crash, when the Dow Jones Industrial Average .DJI lost 22.6% in one day, equivalent to a drop of about 6,500 points in the index today.
The European blue-chip stocks index .STOXX50 was slightly positive even as new COVID-19 cases were growing at a record 150,000 a day in Europe. Parts of the UK were put into lockdown and France imposed curfews. "I think there is a heady cocktail of vaccine optimism, good Asian data and a lack of full scale lockdowns which is helping the sentiment," said John Woolfitt, director of trading at Atlantic Capital Markets.
Trading volumes in Europe were however sharply lower due to a technical glitch at exchange operator Euronext, which led to trading activity being halted in Amsterdam, Brussels, Lisbon and Paris bourses. Second wave worries and no breakthrough in the Brexit stalemate failed to curb risk appetite among investors, after U.S. House Speaker Nancy Pelosi said on Sunday she was optimistic about a coronavirus relief deal before Election Day.
"We're not downgrading our economic forecasts due to the second wave and we believe markets shouldn't be disappointed too as a second wave was expected," said Jeffrey Sacks, investment strategist at Citi Private Bank. "The sharp economic recovery we saw in the latter part of the second quarter and early third is easing now."
Sacks however believes the slowdown in recovery will not affect markets due to continued monetary and fiscal support from central banks and governments. He remains "overweight" equities. Boosting overall sentiment, drugmaker Pfizer Inc PFE.N said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.
Investors also took comfort from China's economic recovery in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth capped stock market gains in Asia. MSCI's broadest index of AsiaPacific shares outside Japan .MIAPJ0000PUS rose 0.5% for a second straight day of gains, paring back following third-quarter gross domestic product data from China.
Meanwhile, separate monthly indicators pointed to an expansion in economic activity in China. Industrial output accelerated 6.9% in September from a year earlier, when analysts were looking for a 5.8% gain from a 5.6% rise in August. In currency markets, the yuan soaring to a fresh 1-1/2-year high against the dollar, while the US dollar =USD slipped 0.3% to 93.415 against a basket of six major currencies. The euro EUR= meanwhile traded 0.3% higher at $1.1756 and the sterling rallied back to near $1.30 levels against the dollar low on Monday.