Market Quick Take - November 17, 2020 Market Quick Take - November 17, 2020 Market Quick Take - November 17, 2020

Market Quick Take - November 17, 2020

Macro 6 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  Markets generally failed to maintain the positive start to the week yesterday despite US drug company Moderna announcing high success rates, similar to those announced recently for Pfizer, for its Covid-19 vaccine candidate. Today we look forward to an October US Retail Sales release that comes after a string of strong readings but amidst a surge in Covid-19 cases.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - The broader S&P 500 index managed to close at an all-time high close yesterday, though action during the cash session was muted and much of the gains were erased overnight. Momentum remains strong as long as the price action stay above the 3,575-3,550 area. The action in the Nasdaq-100 was a bit more lacklustre as the index struggles with the important 12,000 area and where richly valued companies eye US treasury yields somewhat nervously (extreme sensitivity to higher yields). There was considerably more positive action elsewhere as small caps put in another very strong session yesterday.

Bitcoin EUR (BITCOIN_XBTE:xome) - Bitcoin (XBTUSD) is continuing its rally today trading currently around 16,750. Yesterday, sell-side reports flagged Bitcoin as one the big trades for 2021 likely adding to the focus among investors.

Nikkei 225 (JP225.I) - while most other equity markets have paused in their momentum Japanese equities continued higher again today with Nikkei 225 futures pushing above 26,000. The Japanese economy and equity market are a high beta play for 2021 with stimulus and Covid-19 vaccines coming and in our view this market has considerable room for more momentum. In terms of valuation and debt leverage Japanese equities also score well relative to other equity markets.

EURUSD – the trading ranges are painfully muted in EURUSD and there appears to be a very tight positive correlation afoot with broader risk sentiment in recent weeks that is rather apparent for most USD pair, but particularly to here. Technically, for signs that traders are ready to attempt to find some directional momentum, we note the 1.1900 level to the upside as a major resistance, while the 1.1750 level is the downside trigger after last week’s consolidation.

USDCNH – the Chinese renminbi is powering stronger, as USDCNH posted a notable new cycle low yesterday below 6.58 and dropped farther still in the overnight session. As we have noted, if the rate is allowed to outperform a majority of other non-US dollar currencies, China is sending the message that it is not concerned for now about the official CNY reference basket (the yuan measured against a basket of other currencies) having reached a major range high stretching back to mid-2018 and could allow further notably CNY strength.

Gold (XAUUSD) and Silver (XAGUSD) received another setback, albeit not as big as last week, after Moderna announced a more than 94% success rate for its Covid-19 vaccine. The current period of risk on is likely to hurt sentiment with total ETF holdings down to 110 million ounces, a two-month low. The vaccine can kill the virus but not the mountain of debt accumulated during the pandemic. On that basis we do not see current developments as a gamechanger for gold and the prospects for other metals. In the short-term however investors may look to lighten their positions with focus on key support at $1850/oz.

Treasuries yields muted after news of Moderna vaccine (10YUSTNOTEDEC20). We have seen 10-year yields rising by a couple of basis points and closing at 90bps following Moderna’s news of an effective vaccine. This is a much muted move compared to the one we have seen last week with Pfizer’s vaccine. Rates might not rise because there is expectation that the Fed will control the longer part of the yield curve as yesterday Fed President Clarida said that he doesn’t dislike the bond purchasing program and it can be a tool to achieve maximum-employment and price-stability.

Tesla (TSLA:xnas) - rose some 13% in late trading yesterday after the close on the news that it would be included in the S&P 500 index - the largest ever new member in the index. This automatically benefits the share price over the long run from an indexation perspective as long as investors continue to passively accumulate the most indexed companies as they have for years.

Moderna (MRNA:xnas) - this US biotech company jumped almost 10% higher yesterday after announcing a more than 94% success rate for its Covid-19 vaccine candidate, which uses as a method similar to the Pfizer candidate that showed nearly as good a success rate, although Moderna’s apparently may have a longer shelf life at normal freezer and refrigeration temperature, making the logistics of delivering the vaccine easier. In the study, only 5 participants got sick with Covid-19 versus 90 in a control group and none of the five that both got the vaccine and got sick were severely ill, while 11 of the 90 who got sick in the control group were more severely ill.

What is going on?

US Fed’s Clarida signals possible change to Fed bond buying programme - saying that the Fed could change the amounts of the Fed’s purchases to ensure that inflation is running above 2% for some time before reacting in tightening policy. Some see it possible that the Fed could switch to buying longer dated securities as a king of yield-curve-control.

Warren Buffett dumps banks while adding health care stocks in Q3. Berkshire Hathaway continues to slowly adjust its portfolio of stocks for a different future. This includes reducing banking stocks and adding shares in AbbVie, Merck, Pfizer and Bristol-Myers worth $5.7bn.

Brent crude oil (OILUKJAN21) and WTI crude oil (OILUSDEC20) are the best performing commodities since Pfizer and Moderna released their vaccine news. Both benchmarks have risen by 11% since the news broke, while oil sector stocks given their more forward looking ability has performed even better. While the spot crude oil market remains troubled by renewed lockdowns and rising production, energy companies have raced higher with investors looking for value and recovery stocks. Having suffered the most throughout the pandemic companies from Shell, BP, Total and Chevron have all risen by one quarter since January 6. From an ETF perspective the XOP (Exploration & Production) has risen 27% while the XLE (Large cap energy producers) is up by 25% during this times.

Airbnb finally files for IPO on Nasdaq under ticker code ‘ABNB’. The world’s biggest home-sharing platform also released financial statements showing that gross booking value was down 40% y/y for the nine months ended on 30 September reaching $18bn. Airbnb also posted a net income loss of $697mn on revenue of $2.5bn for the nine months ended on 30 September. The company is currently indicating an offering size of $1bn but that could change during the investor roadshow. We suspect strong demand for shares in Airbnb as the company is a high beta play on the recovery after Covid-19.

Chinese saw its shares decline 9% on Q3 earnings. Strong sales and better net income were not enough to satisfy investors as lower margins had investors worrying about future profitability. The company was also politically correct on its conference call supporting the new antitrust measures by the Chinese government.

What we are watching next?

US Senate vote on whether to approve controversial Fed nominee Judy Shelton - Shelton is an outspoken critic of the Federal Reserve and its QE program, and an advocate of using Fed policy to devalue the US dollar, although she would only be one of seven board members if approved, something that seems less likely now that another Republican senator has stepped away from supporting her nomination. A vote could take place as early as this week.

Trump concession and moves during lame duck period... At the weekend, lame duck President Trump countered speculation that his stance on the US Election is softening by declaring that “I concede nothing”.  Perhaps more importantly, Trump appears set to make a string of moves in his lame duck period before Biden’s inauguration on January 20 that could be an effort to force Biden into an awkward position in the early days of his presidency on everything from relations with China to the situation in the Middle East, especially Iran.

Q3 earnings season continues this week. Below list shows the largest companies reporting this week:

  • Today: Experian, Fortum, NIO, Walmart, Home Depot, Sea Ltd
  • Wednesday: AP Moller – Maersk, SSE, NVIDIA, Copart, ZTO Express Cayman, Keysight Technologies, Lowe’s Cos, Target, TJX Cos
  • Thursday: Tokio Marine Holdings, NetEase, Ross Stores, Intuit, Workday, Knorr-Bremse

Economic Calendar Highlights for today (times GMT)

1300 – Hungary Central Bank Rate Decision

1315 – Canada Oct. Housing Starts

1330 – US Oct. Retail Sales

1400 – UK Bank of England Governor Bailey to Speak

1415 – US Oct. Industrial Production and Capacity Utilization

1500 – US Nov. NAHB Housing Market Index

1600 – ECB President Lagarde to Speak

1800 – US Fed Chair Powell to Speak

1900 – Canada Bank of Canada’s Macklem to Speak

2340 – Australia RBA’s Lowe to Speak


Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.