Risk Rallies on Vaccine News

Global equities benchmarks have seen plenty of action in the last 24 hours with major indices all rallying on news of a successful vaccine. The candidate drug being trialled by Pfzier and its German partner BioNTech has been found to be over 90% successful in clinical trials. The drug is now expected to achieve US regulation later this month and, in the UK, the government has already told the NHS to prepare to roll out the first tranche of the vaccine as early as December.

With the UK and many European countries having re-entered lockdown this month, the news comes as a very welcome surprise and offers some light at the end of a very long tunnel, not least for central banks. The prospect of a broader roll out of the drug over the start of next year means that many countries could start to get back to normal by spring/summer.

The vaccine offers the potential of offsetting the major downside risk to the global economic view over the start of the next year, which is the need for further lockdowns (especially during the western winter) as a result of the continued spread of the virus.

While further details are being awaited, the initial news is helping underpin markets and looks likely to continue to do so as traders receive further updates.

Technical Views

DAX

From a technical viewpoint. The DAX has now broken above the bearish channel running from summer highs and is testing the 1322.69 level. While this level is holding as resistance for now, the near term outlook remains bullish while above the 12916.11 level.

S&P500

From a technical viewpoint. The rally in the S&P saw price breaking out to fresh all time highs yesterday before reversing back under the prior 3586 highs, just shy of retesting the broken bullish trend line. While above the 3391.75 level, however, the near term outlook remains bullish.

FTSE

From a technical viewpoint. The FTSE has now broken above the bearish channel running from the summer highs and has also moved above the 6123.3 level. While above here, the view is firmly bullish with a focus on the 6543.4 level next.

NIKKEI

From a technical viewpoint. The rally in the NIKKEI has seen price breaking out to fresh highs though, for now, stalling just shy of testing the underside of the broken bullish channel which framed the initial post-wave one recovery. While above the 24562.3 level, the near term bias remains bullish.

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