DAX tumbles on a day of declines

German stocks falling sharply despite rising vaccination rates. Airlines have been on the front foot, with UK and the EU both planning to reopen for non-essential travel. Meanwhile, Pfizer has gained ground as they benefit from vaccine sales. 

• DAX leads the declines, despite ramp-up in vaccinations 
• Airlines on the rise as Europe prepares to open for summer 
• Pfizer boosted by vaccine sales 

Markets have been rocked by a wave of volatility on an otherwise inconspicuous day, with sharp declines in the DAX and Treasury yields, and cryptos giving way to dollar and gold gains. The decline in Treasury yields does provide the basis for further caution in the reflation trade, cooling expectations of a major pro-cyclical outperformance as vaccines take effect. Interestingly, the 2% collapse in the DAX failed to really highlight any particular focus of selling pressure, with companies across manufacturing, banking, technology, and real estates all losing ground. From a German perspective, we had seen a ramp-up in vaccinations of late, bringing increased hope for a catch-up after stuttering efforts led by the European Commission. Interestingly, the European Commission have been laying the groundwork for a resumption of tourist activity, boosting expectations that the region could receive a tourism boost this summer. Airlines have received a welcome lift as Europe moves closer to resuming non-essential travel, with the UK government expected to spell out exactly what countries fall into each category of the traffic light system. Nonetheless, the resumption of flights does bring its risks, with more infectious and evasive variants from around the world likely to grow in numbers once travel restarts. 

Pfizer earnings highlighted the benefits foregone by AstraZeneca, with the Covid vaccine expected to bring $26 Billion in revenues for the year. There are few expectations that this coronavirus is going away any time soon, and thus the firm can expect to see elevated sales for many years to come. The firm has struck deals with Israel and Canada for Covid vaccines beyond 2021, highlighting the likely need to provide booster vaccinations on an ongoing basis.