Stock Futures Rally on Strong Risk Appetite; Gold Tumbles

Stock Futures Rally on Strong Risk Appetite; Gold Tumbles


Major US stock index futures raced higher on bolstered risk appetite. The vaccine headlines continued to ease investors' woes about the economic outlook. Following Pfizer and Moderna's announcements, AstraZeneca, which is working along with Oxford on a vaccine, published the results of the trials, declaring that its efficacy is above 70% and can be stored at normal fridge conditions. On the other hand, Trump advised his team to start preparing for the transition. Also, another headline that supported the rally was nominating Ex Federal Reserve Chairwomen to be the next Treasury Secretary, raising the chances of fiscal stimulus. The Dow Jones Industrial Average futures rose to 29835, the S&P500 futures rallied to 3605, and Nasdaq futures advanced to 11976.


The dollar index, which measures the greenback against a basket of major currencies, rebounded sharply from 92.01, its lowest level since early September, to 92.80 on upbeat economic data. However, the flow to riskier assets weighed again on the buck, where DXY declined to 92.29. The preliminary reading of the Manufacturing and Services PMI came out better-than-expected, signaling that the US economic activity wasn't affected much by the recent COVID19 spread. The optimism fueled the rally to riskier currencies. The AUDUSD rose to a twelve-week high of $0.7355, and the NZDUSD continued higher to $0.6990, its highest level since June 2018.


Precious metals prices declined significantly as the dollar rose along with US Treasury yields. The optimism over a vaccine weighed on safe assets. The price of a gold ounce dropped to $1821, the lowest since July 21st, the price of a silver ounce fell to $23.24, while palladium futures hovered near $2330.


Oil prices edged higher amid vaccine optimism. Investors are satisfied with vaccine headlines that are signaling that life could be back to normal by the second half of 2021, which would boost oil-demand levels again. On the other hand, top oil producers are ready to extend cuts to stabilize the market if needed. The West Texas Intermediate crude January delivery rose to $43.72, the highest since late August, and the Brent Blend January delivery rallied to 46.70, the highest since early March.

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