European stock futures are soaring as investors have decided to focus on brighter aspects of things such as the J&J’s one-shot vaccine and the US House passing the stimulus bill.
Something that is supporting the sentiment among investors and traders is optimism on the coronavirus vaccine. Over the weekend, the Centers for Disease Control and Prevention advisory panel voted unanimously to recommend the use of Johnson & Johnson’s one-shot coronavirus vaccine. People 18 years of age and older can have this one-shot vaccine, and J&J is expected to ship out 4 million doses.
This particular vaccine shot is a game-changer, and this is because it is going to cut the vaccination time by a large amount—we believe the vaccination time could easily be reduced by more than one-third.
It is pretty simple that people do not have to keep coming back for another shot or what is also known as the second dose or the booster shot. The critical aspect is the reduction in the time between one vaccine and another vaccine shot.
Traders know that with this vaccine, we are likely to see higher economic activity, and it also means a faster path for the world’s economic recovery.
Something that is also boosting the sentiment among traders is that we also had another positive from the US lawmakers over the weekend. The House passed Joe Biden’s stimulus package of 1.9 trillion.
Traders see this as a massive opportunity for the US economy to recover. Having said that, it is important to keep in mind that we are not out of the woods yet, and the reason for that is that the stimulus bill still needs to be passed from the US Senate. It is the Senate, where most of the time, the bill doesn’t get the approval that easily.
In terms of economic numbers, later today, we are going to get the final read for Markit’s US Manufacturing Purchasing Managers’ index. The forecast is for 58.5, which is the same as the previous month. Any number that is better than this will only boost confidence, which could push the equity markets higher.
We are finally seeing some signs of life creeping back in the commodity market as gold prices increased after a massive sell-off last week. Gold traders are still not entirely in love with the precious metal as they believe that the US may change the monetary policy path, which could result in a higher dollar.
Basically, we very much see a scenario of a taper tantrum. With all the loose monetary policy and ample help in terms of stimulus, the US economic recovery is bound to shift in a higher gear which isn’t really that much good news.
Having said all that, the reason that we see higher gold prices is also mainly the US House passed the stimulus package. Remember, we have a real fear of higher inflation, and another inflation package will only fuel the fire.