The dynamics of the primary world stock markets before and after the US presidential elections substantially respected forecasts, in the sense that the rapid correction on the eve was followed by a prompt recovery which brought shares of the indices back to the top of the recent range. <\/p>\n\n\n\n
The now incontrovertible victory of the democratic candidate, even if it were made official by the US Chamber only on December 14th, nevertheless entailed a renewed interest from investors in European securities and in particular for the sectors that had suffered most from the tariff policy implemented by the Trump government; take the automotive industry as an example. But the decisive element that has probably launched a new course in the fundamental dynamics of international stock exchanges is represented by the recent announcements by some pharmaceutical companies that they are close to successfully completing phase 3 of the vaccine experimentation, which would herald the gradual arrival of the same on the market at the turn of the year. This hypothesis, while waiting for the confirmation of the scientific authorities, is leading to a sudden rotation of the demand for shares from the growth sectors that have dominated the stock market scene since March, think of sectors such as technology, bioengineering, logistics, media, and so on, to the sectors of the old economy, considered mature and under valued precisely because they were considered less profitable, which have suffered notably due to the blocking of non-essential activities, such as industrial, durable goods, energy, entertainment, financial etc \u2026 In fact, with the arrival of vaccines, a slow return to a sort of new normality is envisaged, which, after passing the phase of domestic confinement and production stoppages, re-proposes more traditional consumption and investment habits, it being understood that online shopping, teleworking and distance learning have now fully entered the socio-economic reality. <\/p>\n\n\n\n
A logical consequence of these recent developments could be represented by a serious attempt by the European stock market indices aimed at closing the gap with respect to US stocks, hitherto outperforming due to the high weighting of growth stocks. To quantify the potential from now to the end of the year for the S&P 500 index, it can be observed that the target of 3750 points, which insiders had indicated at the beginning of the year before the pandemic, is easily achievable, while in Europe the EuroStoxx 50 index has just overcome resistance at 3450 points and is starting to move up to the next technical milestone of 3550 points, after which a large gap opens up, delimited by the previous period high of 3867 points. Changing theme, in the aftermath of the US elections, there was not only Pfizer’s announcement that its vaccine is in the pipeline, but after three years of negotiations between 14 signatory countries, there was also the improvement of the free trade treaty RCEP (Regional Comprehensive Economic Partnership) which groups the ASEAN countries plus China, Japan, South Korea, Australia and New Zealand. This is a great success for China, and it is no coincidence that the agreement was signed after Trump most likely lost the elections, as the USA, which had already withdrawn with the previous Administration from the agreement desired by Obama, TPP, are totally removed from a free trade area that is worth 30% of world GDP and consisting of 2 billion people. In fact, Beijing absolutely needed to create a vast alternative market to the Western one, to compensate for the expected loss of endogenous production capacity and exogenous demand, as a consequence of the negative impact, also to its image, following the spread of Sars-Cov-2 which originated in the Asian giant. <\/p>\n\n\n\n
If we add to this the moderate trend of the weakness of the US dollar, to which all Asian currencies are pragmatically linked, it is reasonable to expect a positive underlying trend for all Asian stock markets also for 2021. The various elements examined so far, which in summary, give hope for a slow normalization of the economic cycle, penalize in the short term investments in safe-haven assets, such as gold, which also from a technical point of view has support at 1850 dollars an ounce, which if surpassed, would negate the recent bullish phase of the yellow metal. Similarly, it appears only a matter of time, the onset of a negative reaction of long-term fixed income, thereby increasing yields, especially in the case of securities denominated in dollars.<\/p>\n\n\n\n
Nicola Bravetti Data Source: Bloomberg
\u201cThis report cannot – nor can – be considered a solicitation to invest in financial instruments\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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