Further Vaccine Headlines Boost Risk Appetite

It’s been another strong start to the week for risk assets as a new set of headlines relating to COVID vaccines has helped lift sentiment further. On the back of last week’s news from Pfizer and BioNTech that their jointly developed vaccine has proven to be over 90% effective in clinical trials, US company Moderna made a similar announcement this week.

Moderns reported that its clinical trials, which have been run on 30,000 test patients, have shown its candidate vaccine to be 94.5% effective, making it more effective than the one developed by Pfizer and BioNTech. Further news of another highly successful vaccine has offered markets a fresh lift this week with traders no beginning to sense that the pandemic can be brought under control next year, allowing countries to return to normal.

While markets are waiting on further details, such as confirmation of regulation and a timeline for these drugs being rolled out, the news has helped underpin risk sentiment and looks likely to keep risk assets supported in the near term.

With regard to the US elections, despite Trump having yet to officially concede and leave the White House, the market has firmly priced in a Biden win and is now looking ahead to the potential policy impact. To this end, comments over the weekend from some of Biden’s top advisors, suggesting the new president would not be implementing a further nationwide lockdown have also helped lift risk assets, despite the growing number of infections and deaths in the US.

Technical Views

DAX

The DAX continues to hold above the broken bearish channel though, for now, is capped by resistance at the 13322.69 level. While price holds above 12916.11, however, the bias remains bullish in the near term.

S&P500

The S&P has broken back above the 3586 level again this week following a test above the level last week. If price can sustain this breach, the bias remains firmly bullish with the next challenge being the retest of the broken bullish trend line sitting just above market.

FTSE

Following the breakout above the bearish trend line from summer highs, the FTSE has broken above the 6123.3 level and is now fast approaching the 6518.2 level. While prices holds above the 6123.3 level, the bias remains for continued upside and a break above the next resistance level.

NIKKEI

As the NIKKEI continues to forge fresh highs, the market is now close to retesting the underside of the broken bullish channel which has framed the recovery this year. To the downside, the main support is sitting at the 24562.3 level with the 24069.4 level just underneath.

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