vaccine

The vaccine euphoria boost up markets

In November, the world was following up the presidential election in the United States, the development of the pandemic and related to it restrictions and nogotiations around Brexit. Despite all the uncertainties surrounding these, the stock markets had a very good month. In the Far East, major trading floors made two-digit shifts. Nikkei225 grew by 14.38% during this period, and Korean Kospi by 13.82%. The Chinese stock exchange may boast a weaker result – the Shanghai Composite index changed its value by 5.05%. In Europe, investors operated on a risk-on basis. The DAX closed the session on the last day of the month at 13,291.16 (monthly change +14.55%), the neighboring country index (CAC40) was close to breaking the 20% MoM increase (final result is 19.58%). In the UK, despite the complexities of Brexit talks, the FTSE100 grew by 12.35%. Stock exchange at Książęca street in Warsaw gave investors solid results – WIG changed in plus by 18.52%, and the index consisting of the 20 largest companies (WIG20) by as much as 19.58%! People investing their funds in securities of American companies also had reason to be happy. The S&P500 changed its valuation by 9.87%, the Nasdaq Composite approached the 11% increase (10.79% to be exact), and the Dow Jones Industrial Average broke this limit (11.04% MoM change). For DJIA, November was the best month since 1987. Market commentators agree that the big gains in the global stock exchanges are due to vaccine euphoria. In recent weeks, we have been surprised every few days with new information from laboratories. Pfizer, in collaboration with BioNTech, announced that their Covid-19 vaccine has an effectiveness of up to 95%. The United Kingdom has announced that the product of the previously mentioned companies has been approved for use, and the first shipment of vaccines is expected to hit the Islands next week. Boris Johnson’s government predicts 10 million UK citizens will be vaccinated by the end of the year.

December started with a strong accent on the markets. Tuesday’s sessions were dominated by the bullish mood. New records of stock exchange indices were recorded in the United States. Grist for the mill are hopes that the Republicans and Democrats will come to a compromise on the fiscal package that would help the economy start in 2021. An important aspect that also triggers the risk-on is the weakening of the dollar against the euro. If the level of 1.20 on the EUR/USD pair is exceeded, other currencies that are bought for the dollar also gain in value. In that situation investors are more interested in emerging markets, where it is easier to find an investment opportunity than in the US, where stock prices are high or very high.

Currency exchange rates quoted in Polish Zloty (source: stooq.pl)

On the currency pairs compared with the Polish Zloty, we have been observing a strengthening of the Polish currency since the beginning of November. After the depreciation of the Zloty, which continued throughout October, the trend in November was reversed and at this point the Zloty exchange rate is at levels from the beginning of October. At this point, the Euro costs 4.4650 PLN, the US Dollar costs 3.7050. The exchange rate for the Swiss Franc is 4.1020 and the British Pound is 4.9340.

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