Global stocks' virus vaccine boost fades

View of the New York Stock Exchange (NYSE) at Wall Street on November 16, 2020 in New York City. Wall Street stocks rose early following upbeat news on a coronavirus vaccine and merger announcements in the banking and retail industries.(Angela Weiss / AFP)

Equities on both sides of the Atlantic surged higher on Monday following news from American biotech group Moderna that its vaccine candidate was 94.5 percent effective in preventing Covid-19 -- the second positive vaccine news in a week.

On Wall Street, the Dow and S&P 500 hit new record highs Monday, with the Dow coming within 40 points of 30,000.

But the rally petered out on Tuesday, with the Dow closing 0.6 percent lower and the Nasdaq and S&P 500 also ending in the red.

Analysts believe the setback is temporary considering that New York stocks were due for a pause after significant increases this month.

"It doesn't seem that the market is really in any danger of giving back any serious gain," Peter Cardillo of Spartan Capital told AFP.

In Europe, London dropped 0.9 percent at the close, while Frankfurt was essentially unchanged and Paris gained 0.2 percent.

Covid-19 infections have been surging across the US and Europe, chances have diminished that Washington lawmakers will pass a big stimulus package before Joe Biden is sworn in as president in January.

That has traders shifting their focus away from the US elections earlier this month and towards the state of the economy.

"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," said Chris Iggo at AXA Investment Managers.

But like Cardillo, Briefing.com analyst Patrick J. O'Hare noted that the Dow has shot 13 percent higher in the past 11 trading sessions.

"For now, this... weakness has more to do with a pullback from a short-term overbought position."

- Not happening -

Dealers have been upbeat since the conclusion of the US election and its attendant uncertainty, as well as the recent announcement by pharmaceutical giants Pfizer and BioNTech that their virus vaccine had been 90 percent effective in trials.

That fanned hopes the global economy could soon begin to get back on track.

But Fed Chair Jerome Powell again poured cold water on those hopes.

"With the virus now spreading at a fast rate, the next few months may be very challenging," he said in a discussion. "So it's probably too soon to say with any confidence what the impact on the path of the economy will be from the vaccines."

Hopes for a US stimulus meanwhile remain slim. Biden on Monday called for Congress to pass a Covid-19 relief package like one enacted earlier in the year that helped the economy weather the initial phase of the outbreak.

But Republicans controlling the Senate have showed no signs of budging in their opposition to such a bill.

In currency trading, the dollar was lower versus its main rivals, while sterling gained on hopes of a post-Brexit trade deal between the European Union and Britain as talks began in Brussels.

Oil prices gained little as OPEC and non-cartel producers met to discuss output levels amid battered global crude demand.

A joint statement issued after the meeting said: "All participating countries need to be vigilant, proactive and be prepared to act, when necessary, to the requirements of the market."

- Key figures around 2220 GMT -

New York - Dow: DOWN 0.6 percent at 29,783.35 (close)

New York - Nasdaq: DOWN 0.2 percent at 11,899.34 (close)

New York - S&P 500: DOWN 0.5 percent at 3,609.53 (close)

London - FTSE 100: DOWN 0.9 percent at 6,365.33 points (close)

Frankfurt - DAX 30: FLAT at 13,133.47 (close)

Paris - CAC 40: UP 0.2 percent at 5,483.00 (close)

EURO STOXX 50: UP 0.1 percent at 3,468.48 (close)

Tokyo - Nikkei 225: UP 0.4 percent at 26,014.62 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 26,415.09 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,339.90 (close)

Euro/dollar: UP at $1.1862 from $1.1854 at 2200 GMT

Pound/dollar: UP at $1.3254 from $1.3198

Dollar/yen: DOWN at 104.17 yen from 104.56 yen

Euro/pound: DOWN at 89.47 pence from 89.82 pence

West Texas Intermediate: UP 0.2 percent at $41.40 per barrel

Brent North Sea crude: DOWN 0.2 percent at $43.75