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- Global markets saw almost US$2 trillion (A$2.75 trillion) worth of trading activity yesterday following a breakthrough in the race for a COVID-19 vaccine
- Investors moved away from historically reliable tech-based stocks to riskier plays in equities, foreign exchange and bond markets
- The United States saw nearly US$500 billion (A$687 billion) worth of trades on Monday, while Europe collectively saw US$120 billion (A$165 billion) change hands
- Early trading on Tuesday drove the ASX 200 up almost 2.2 per cent – its highest point since March 5
- NAB also published the results of a business confidence survey, outlining a spike to its highest level since mid-2019
Global markets saw almost US$2 trillion (A$2.75 trillion) worth of trading activity yesterday following a breakthrough in the race for a COVID-19 vaccine.
The news triggered a shift among investors from historically safe tech-based stocks to riskier plays in equities, foreign exchange and bond markets. Amazon, Facebook and Microsoft experienced some of the heaviest losses, losing between 2.5 and 3.5 per cent.
“The strong results from the Pfizer vaccine were better than most expected and [mean] we could be opening back up sooner than expected,” said Ryan Detrick, LPL Financial’s chief market strategist.
In the United States alone, nearly US$500 billion (A$687 billion) worth of trades went through the stock market on Monday, representing one of the busiest days since March, while Europe collectively saw US$120 billion (A$165 billion) change hands.
Value stocks – established companies that are more sensitive to economic cycles – proved to be the most popular, heralding their best single-day performance in history compared to their growth-focused counterparts.
A similar trend emerged among bond and currency markets, where volumes matched the panic-induced trading seen during peak volatility in March, and doubled April’s activity.
Mark Taylor, a trader at Mirabaud Securities, noted that volumes are surging “as programs and baskets go to work to either correct portfolio balances or address margin calls,” highlighting a jump in volumes in the airlines and banking sectors.
Australian shares are also now set to rise above their eight-month high. Early trading on Tuesday drove the ASX 200 up almost 2.2 per cent – its highest point since March 5.
The air of optimism culminated in a more positive outlook generally, with NAB publishing the results of a business confidence survey outlining a spike to its highest level since mid-2019.
NAB’s chief economist, Alan Oster, said the improvement in confidence was encouraging, but remained fragile, and was likely to stay that way until there was a vaccine.
“Business conditions saw a marginal improvement in the month. Trading conditions and profitability continue to improve as the economy opens up,” he added.
