There was a turnaround in market sentiment last week as some positive vaccine news made the headlines. Moderna’s experimental coronavirus vaccine next stage is a large and decisive clinical trial after recent results showed the shot induced the desired immune response while Oxford’s scientists also reported on results that blood samples taken from a group of UK volunteers that had a dose of the vaccine produced both antibodies and “killer T-cells” that can stay in circulation after the antibodies fade. The interesting trend of last week was the underperformance of the Nasdaq versus the S&P 500 which was triggered by an initial selloff in Amazon (amongst other tech stocks) and later in the week in Netflix after the company reported weaker-than-expected guidance on new subscribers. The weakness in the underlying index may have been exacerbated by the shift of funds back into growth from value stocks i.e. the recovery trade on vaccine hopes.

Leading up to the weekend we had headline news around the EU Recovery fund which most analysts foresaw as a no deal meeting. In fact, the Merkel herself downplayed markets expectations by saying that an outcome would be unlikely. However, as we publish this note there seems to be optimism that a deal will be met with the grant to low interest loans ratio leaning towards 390BN(EUR) versus 360BN(EUR), a very good outcome indeed as the Frugal Four were not at all keen on the grants section of the recovery fund.

Oil continues to trade in a range with the commodity opening up weaker today as demand concerns cloud its outlook. As long as the pandemic is still out of control globally but especially in the States and as OPEC+ is preparing to return supply to the market next month after historic cuts, oil will be pressured.

Earnings continue this week with the next eyes on IBM later today and PMIs data in Europe and the US on Friday. On the ratings front last Friday, Moody’s kept the rating or outlook for Portugal unchanged while this Friday we await a rating review for Finland (Moody’s), Greece (Fitch) and The Netherlands (DBRS).