- Mixed trading in the Asian session as investors digested vaccine developments.
- Reduced vaccine production could drag on European stock markets.
- EU Stoxx 50 could pullback as price tests key resistance.
Asia Trade Recap
Trade was mixed in the Asian session as investors mulled over vaccine developments and looked ahead to the release of the US non-farm payrolls report.
Australia’s ASX 200 index rallied0.28% following October retail sales figures which rose for the first time in 3 months.Japan’s Nikkei 225 slipped 0.22% lower.
In FX markets, the risk-sensitive AUD and NZD headed lower versus the safe haven USD and JPY, while the commodity-linked NOK largely outperformed.
Looking ahead, US non-farm payrolls for November will be in focus.
Vaccine News May Weigh on European Equities
After hitting a multi-month low in November, European stock markets have surged lifted by positive vaccine news and the prospect of additional monetary easing by the European Central Bank.
However, reports that Pfizer will scale back its coronavirus vaccine production targets on logistical difficulties could drag on sentiment and demand for stocks in the near term.
ECB Monetary Policy Easing to Limit Downside
Expectations of additional monetary easing could cap the downside for regional risk assets.The minutes from the latest ECB meeting pointed to the ECB easing in December.
The central bank is expected to expand its 1.35 trillion Pandemic Emergency Purchase Program (PEPP) and offer new long-term loans to banks through Targeted Longer-Term Refinancing Operations (TLTROs).
Whilst a rate cut is unlikely, the prospect of additional easing may underpin European equity prices ahead of the ECB’s monetary policy meeting on December 10.