- S&P 500 futures break above 3000 – Novavax coronavirus vaccine offers investors hope
- Nikkei 225 reaches ten-week high – Japan ends its state of emergency
- The dollar index (DXY) backs off from 100 level – Economies reopening cuts haven flows
- Travel stocks fly! (TUI +25%) – Germany considers ending some tourist travel warnings
Investors are betting that a vaccine will cure all the market’s ills. News from US pharmaceutical company Novavax that it is ready for human trials of its coronavirus vaccine is reigniting animal spirits. The initial results of the trials will be available in July. The vaccine news has been the spark that was needed to push stock markets above and beyond month-long sideways ranges. Another new vaccine in development offers another path towards the coronavirus endgame.
The S&P 500 is pointing to a move above the important 3000 threshold at the open. It means the US benchmark would reach its highest since early March. Japan’s stock benchmark the Nikkei 225 reached its highest in 10 weeks after Prime Minister Shinzo Abe ended the country’s state of emergency in all cities and regions.
Healthcare and travel companies were leading the gains across European indices. Virus cases falling after over a month of lifting lockdown restrictions means travel restrictions are the next to go. Austria, Germany, and Switzerland had already relaxed travel between their borders. Germany is now considering removing a travel warning to tourists for 31 European destinations. Travel company TUI saw shares surge over 25%. The timing couldn’t be better for travel firms hoping to grab the end of the Summer bookings season.
States lifting lockdown measures and Novavax making progress towards another coronavirus vaccine means less need for a haven like the dollar. Gold also fell but remains comfortably above $1700 per oz, cushioned by the weaker dollar. The pullback in the dollar comes as optimism in Europe is building around the €500 billion recovery fund. For the most part, currencies have been trading in tight ranges, with interest rates pressed to the floor globally.
Chart: Offshore yuan (6-months)
The dollar remains elevated against the yuan over escalating US-China tensions. The exchange rate is testing 7.165, a ceiling to the price since October.