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World Stocks Ease Further From Highs, Oil Dips On COVID-19 Count

Positive news about potential vaccines had helped push the MSCI World Index to a record high earlier in the week, only to see investors pull back as a host of countries announced record infection rates and tougher lockdowns.

Nov 19, 2020 / 04:15 PM IST

World stocks eased for the third day in a row and oil fell on Thursday tracking overnight weakness in Asia and Wall Street as widening COVID-19 restrictions weighed on market sentiment.

Positive news about potential vaccines had helped push the MSCI World Index to a record high earlier in the week, only to see investors pull back as a host of countries announced record infection rates and tougher lockdowns.

At 0844 GMT, the broad gauge of global equities was trading down 0.3 percent while Europe's major indexes were down around 0.7 percent. Oil prices also eased as virus restrictions crimped demand expectations.

The weaker sentiment was triggered by a late US sell-off overnight that had seen the S&P 500 close down 1.1 percent; weighed by news COVID-19 deaths in the world's biggest economy had passed 250,000, underpinning a host of lockdowns.

Similarly sombre news in Japan, where a record number of cases and a rise in Tokyo's pandemic alert level sent the Nikkei down 0.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent.


COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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"The biggest question in the markets right now is whether the headlines of renewed school closures, lockdowns and social restrictions is enough to derail vaccine positives and the fact that COVID survival rates are climbing along with the hospitalisation and infection rates," said a London-based trader.

The positive vaccine news had continued yesterday after Pfizer said its COVID-19 vaccine was 95 percent effective and it would apply for emergency US authorization within days, following a similar recent report from Moderna.

Looking ahead, Wall Street futures point to a steady open, with all eyes on the Federal Reserve for further signs it could step in with fresh monetary stimulus - something two officials nodded to on Wednesday.

Investors will also await US jobs data at 1330 GMT.

Against a basket of currencies the dollar was last at 92.575, marginally in the black but just off its recent low of 92.129. The euro, meanwhile, was down 0.1 percent and just short of the recent peak of $1.1919.

"The vaccines news are a positive medium-term impulse for the global economic outlook and investors are trying to weigh that against the prospect of an imminent stalling of the European and US recovery amid the prospect of extensions of current lockdown measures," said Rodrigo Catril, a senior FX strategist at NAB.

Sterling, however, was weaker still, down 0.5 percent after a report Europe's leaders would demand the European Commission publish no-deal plans as the deadline for talks over a trade deal go down to the wire.

Despite the equity market caution, gold traders continued to take a longer-term view, betting the COVID-19 vaccines would translate into a quicker economic recovery, sending the yellow metal to a one-week low.

Bitcoin, sometimes regarded as a safe haven or at least a hedge against inflation, also pulled back and last stood at $17,500.
first published: Nov 19, 2020 04:15 pm

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