Daily Market Recap - Market sentiment turns bullish on stimulus and vaccine

The New York Stock Exchange opened sharply higher on Monday, as investors regained risk appetite on the back of falling bond yields, the passage of the stimulus package by the House of Representatives, and the approval of a new coronavirus vaccine.

In the US government bond market, the yield on 10-year Treasury bills fell by nearly four basis points to 1.4204%, down from last Thursday's high of 1.614%. This decline in government and corporate financing costs is supporting the stock market rebound.

Further encouraging news items fuelled the optimism in markets today. Notably the US government's approval of Johnson & Johnson's covid-19 vaccine, seen by the markets as another step toward reopening the economy.

Investors also welcomed the adoption of the Biden administration's $1.9 trillion (€1.575 billion) stimulus package by the House of Representatives, as well as the decline in government bond yields, which had fuelled tensions last week.

“Sentiment is risk-oriented with investors more interested in cyclical stocks, while progress on the immunization campaign and better macroeconomic figures point to a better environment for growth,” said Keith Buchanan, portfolio manager at Globalt.

Investors will continue to monitor the indicators closely in the coming days in the hope that they rule out the prospect of an overheated economy which may prompt the US Federal Reserve to adjust its stance on raising interest rates.

(Chart Source: Tradingview 01.03.2021)

Despite the recent upsurge in market volatility, strategists recommend that investors stay invested in inequities. “The objective is to accompany the markets in their upward trend, driven by corporate earnings capacity, visibility on global liquidity in 2021, and an unprecedented economic boom”, explains Edmond de Rothschild Asset Management.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.