S&P 500: Triple triumph thanks to Moderna, potential Chinese V-shaped recovery, softer US tone on China
|- Stocks are rising on hopes from a vaccine, coming primarily from Moderna.
- China's oil demand is nearing pre-crisis levels, a sign of recovery.
- Within anti-Beijing comments, a White House adviser also noted China is adhering to the trade deal.
Recovering only maybe at the end of 2021? Doom and gloom? Not so fast, as stock markets are on the rise, with S&P futures topping the 2,900 level and eyeing the post-crash highs once again.
Investors seem to ignore the depressing comments from Jerome Powell, Chairman of the Federal Reserve, who warned of a long road ahead.
1) Maybe there is a vaccine?
A full recovery will have to wait for a vaccine, said Powell. And new hope is emerging.
Moderna, an American pharmaceutical company, said that it is seeing positive results in its coronavirus vaccine trials. While details are lacking and being able to manufacture and distribute an immunization may take time, the firm's announcement is good news.
The Jenner Institute at Oxford University is also making headway in its own efforts to develop a COVID-19 vaccine.
2) V-shaped recovery in China
Bloomberg has reported that Chinese oil demand is almost back to pre-virus levels. Consumption of diesel and gasoline fuel has already fully recovered amid higher usage of cars – better for social distancing – and resumption of activity in factories.
After a decline of around 20%, consumption is around 13 million barrels per day, down from a peak of 13.7 mbpd in December 2019.
China was the first to suffer from the coronavirus, initially tried to cover up, but quickly imposed a harsh lockdown. Its preliminary signs of a V-shaped recovery is encouraging for the world economy.
3) Softer US approach to China?
Peter Navarro, a China hawk at the White House, alleged over the weekend that China sent infected people on planes to sow the seeds of the disease. That is harsh rhetoric, moving a step higher in comparison to comments by President Donald Trump and Secretary of State Mike Pompeo.
On Monday, his WH peer Kevin Hasset said that China seems to adhere to the deal signed only January 15. While the economic adviser to the president did have some criticism against Beijing – saying it has brought a reboot to relations – his tone is already much more moderate.
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