ASX 200 Weekly Wrap up: Pfizer Vaccine Update Charting Out Market Trends

  • November 15, 2020 12:12 AM AEDT
  • Kunal Sawhney
    Kunal Sawhney
    CEO Kunal Sawhney
    2781 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

ASX 200 Weekly Wrap up: Pfizer Vaccine Update Charting Out Market Trends

Summary

  • ASX started the week with a bang as US election outcome was cheered across the world, posting a new eight months high of 6470.9 during the week and closed 3.47% up.
  • Major upliftment in the sentiments was seen following the Pfizer vaccine update, showing 90% efficacy in Phase III trials.
  • Pfizer has also declared to deliver 50 million doses within this year and another 1.3 billion doses in the next year.
  • There was a knee jerk reaction seen in the tech stocks across the globe as “work from home” theme could take a hit after the situation gets normal.
  • A massive crash of 5% in the safe haven was also seen on the back of vaccine update, which also affected the gold miners on ASX.
  • Last two trading sessions were red as the fear of rising coronavirus cases is again gripping the market.
  • The volatility has also increased as A-VIX has recovered significantly from the week’s low and closed with a minor uptick of 0.79%

 

Although the US Presidential election was held last week, due to huge number of mail-in ballot voting, it took four painstaking days to declare a decisive lead by newly elected president Joe Biden and vice president Kamala Harris.

The financial markets across the world cheered the outcome of the election and consequently shown a one-sided rally in the beginning of the week. The charged-up bulls took the S&P/ASX200 to new eight months high of 6470.9 in a straight rally.

The week started with a bang. What moved the market?

In the midst of a record-breaking surge in the coronavirus across the globe, especially in the European countries and USA which forced some European countries to go back into the lockdown, a ray of hope has emerged.

Pfizer, one of the leading candidates working on the vaccine development, came out with its vaccine update, being jointly developed with BioNTech. The company announced a healthy 90% efficacy of its vaccine in preventing the coronavirus infections in its phase III trial.

This announcement came as a ray of light during the times when infection around the world is soaring up through the roof. Pfizer is also confident about supplying a quick lot of 50 million doses within this year. With a massive production plan, an eye-opening dose of up to 1.3 billion is on the cards to be supplied in the next year.

This is the first time since pandemic when a company didn’t just come out with the vaccine update but also the production plans which makes it significantly closer to what the entire world is hoping for.    

GOOD READ: Share Market Hails Joe Biden's Win, S&P/ASX 200 Futures up 1.45%

Sell off in stocks powering “work from the home theme”

After the vaccine update by Pfizer, there was a knee jerk reaction seen in the financial markets which hammered the technology stocks across the globe. A vaccine is all one needs to reopen the economy, which is probably not a good sign for the stocks powering “work from home’ theme.

This led to investors pulling money out of the technology space in the blink of an eye. Even giants like Facebook, Amazon, Google couldn’t save themselves from the sudden reaction. However, as the week wore on, concerns regarding the virus grew back, leading to some recovery in the technology space.

ALSO READ: COVID-19 Vaccine News Sends ASX Banks Soaring Higher

Investors giving another thought to the safe haven

Gold had been the hottest buzz in the commodity space this week as investors started to think again to park their money in the gold. On the day of the vaccine news break, Gold dropped almost 5% in a day. This shock was also taken by the gold miners on the ASX.

Since then, it is only trying to recover from the low as there is still a tussle between the pessimism regarding new virus spread and the optimism regarding the vaccine.  

Modestly lower closing to end the week

However, the Australian market closed modestly lower on as the fear concerning the surging cases of coronavirus is again gripping the market. The Friday accounted for a 0.2% fall in the S&P/ASX200 which closed at 6405.2 compared to the previous closing of at 6418.2.

On the last day of the week, there was a lacklustre performance from various broader market indices as well. Although not with a major cut but red sea of numbers was seen across the board. The broader indices S&P/ASX 20, S&P/ASX 50 and S&P/ASX 100 all closed the Friday’s

session with 0.25%, 0.41% and 0.24% cut respectively.

Some sectoral indices that closed in red were S&P/ASX 200 Financials and S&P/ASX 200 Industrials; both fell by 0.29% and 0.59% respectively.

However, a few of the sectors tried to hold their gains on the last day, including S&P/ASX 200 Health Care and S&P/ASX 300 Metals and Mining, both notching up by 0.2% and 0.26% respectively.  

After the initial rally and a minor red trading session in the last two days, the overall week stood positive, and S&P/ASX 200 closed 3.47% up compared to the previous week.

Surprisingly, Volatility is also coming back

The volatility of the financial markets was crashed massively after Joe Biden’s surpassed the majority vote count. In fact, the market was quite optimistic even before the outcome, was seen through the decreasing volatility prior to the result. This was a bit unusual as it denoted a highly probable outcome of the election.

However, the rising cases of coronavirus are again triggering a sense of fear in the market and have led volatility to recover from its low of the week. Generally, volatility tends to rise when there is a sense of fear or a high uncertainty regarding any event.

The A-VIX which measures the volatility of ASX 200 closed at 19.741 and made a low of 14.58 during this week. That’s a 26% drop in the volatility. However, the A-VIX rebounded sharply from the low and closed the week back around the same level of 19.87, slightly higher by 0.79% than the last week’s closing.

 


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