Global Stock Rotation Continues on Vaccine News: Markets Wrap

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(Bloomberg) — Investors continued to rotate into stocks more sensitive to economic growth Tuesday as they weighed renewed optimism about a Covid-19 vaccine against the coronavirus’s continued spread. The dollar extended a decline.

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While most Asian benchmarks were little changed, energy and financial stocks pushed higher, and health care and communication shares lagged. U.S. futures retreated after the S&P 500 closed at an all-time high as Moderna Inc.’s vaccine was shown to be 94.5% effective. Stocks poised to benefit from a reopening, such as cruise lines and air carriers, were among the day’s best performers on Wall Street. European futures slid.

Elsewhere, Tesla Inc. shares jumped more than 10% in after-hours trading after an announcement that Elon Musk’s carmaker will join the S&P 500 Index on Dec. 21. Benchmark Treasury yields pushed back above 0.90%. Oil advanced above $41 a barrel. The pound ticked higher on optimism over a Brexit deal.

© Bloomberg Cheapest U.S. stocks are favored after turning tables on momentum-driven shares

The vaccine news has the potential to add another driver to a global stocks rotation into value and cyclical sectors that have been hardest hit by the pandemic, and out of more defensive industries like technology. Investors are hoping that vaccines will allow economies to reopen next year, though distribution is expected to be a significant challenge.

“We might be transitioning from a defensive bull market to a more cyclically offensive one but more clarity is required in terms of when social mobility will normalize,” said Chris Iggo, chief investment officer of core investments at Axa Investment Managers. “The euphoria created by the presidential election result and the vaccine announcement will give way to a more sober analysis of how long and smooth the road to recovery will be.”

Concerns about a sustainable economic recovery persist amid a flare-up in virus cases around the world. The pandemic continues to escalate in Europe and the U.S. The seven-day average of new cases in the U.S. was climbing in every state on Sunday.

Here are some events to watch out for this week:

Brexit talks look set to continue as the U.K. and EU approach the latest deadline.Bloomberg New Economy Forum virtually convenes global leaders to discuss trade, growing political populism, climate change, and the pandemic. Through Nov. 19.OPEC+ Joint Ministerial Monitoring Committee meets Tuesday.U.S. retail sales due Tuesday.Bank Indonesia rate decision Thursday.

These are the main moves in markets:

Stocks

S&P 500 futures slipped 0.5% as of 6 a.m. in London. The S&P 500 Index climbed 1.2%.Topix index rose 0.2%.The S&P/ASX 200 Index rose 0.2%.Kospi index was little changed.Hong Kong’s Hang Seng Index was little changed.Shanghai Composite Index fell 0.3%.Euro Stoxx 50 contracts fell 0.6%.

Currencies

The yen rose 0.1% to 104.51 per dollar.The offshore yuan was at 6.5603 per dollar, up 0.2%.The Bloomberg Dollar Spot Index decreased 0.1%.The euro traded at $1.1856.The British pound rose 0.1% to $1.3216.

Bonds

The yield on 10-year Treasuries ticked up to 0.91%.Australia’s 10-year bond yield rose seven basis points to 0.96%.

Commodities

West Texas Intermediate crude rose 0.8% to $41.66 a barrel.Gold was steady at $1,888.73 an ounce.

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