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Vaccines drive investor sentiment, not data, not corporate profits Reuters

© Reuters.File photo: COVID-19 vaccination in Swindon


Mark Jones and Dara Lana Singe

London (Reuters)-Forget Economic Data Releases and Corporate Statements-Vaccine Deployment Progress Measures Markets Where Fund Managers and Analysts Can Recover Fastest from COVID-19 Devastation , What we are looking at to guide investment decisions.

The consensus is that global economic growth will recover by more than 5% this year, but Refinitiv I / B / E / S predicts 2021 revenue growth of 38% and 21% in Europe and the United States, respectively. I will.

However, these forecasts and investment themes are almost entirely dependent on how quickly the vaccination campaign progresses. With the new COVID-19 shares and new lockdown extensions, official data releases and company profit loss statements are hopelessly obsolete for those who use them to guide investment decisions.

Mark McCormick (NYSE :), Head of Currency Strategy at TD Securities, said: “Vaccine competition is again a major wildcard. It will shape the outlook and perceptions of global growth leadership in 2021.

“Vaccines may enhance a more synchronized recovery in the second half (2021), but early figures will enhance fundamental changes between the United States, the euro area, etc.”

The question is which country will first vaccinate 60% to 70% of the population. This is the threshold that is generally considered to give factories, bars and hotels a herd immunity that can be safely reopened. Delays may require more inspiration from governments and central banks.

Advances in patchy vaccines have forced some to postpone early estimates of when herd immunity can be reached. Deutsche Bank (DE :) expects spring in the Northern Hemisphere to be a turning point, but states that late autumn is more realistic than summer. 20% to 25% of people are vaccinated and the restrictions are gradually lifted.

But the winners of the race are already becoming apparent, especially in Israel, where rapid immunization campaigns have created a torrent of market investment, pushing the shekel to a quarter-century high.

Shoot in the arms

Other slow-moving companies, such as South Africa and Brazil, are being punished by the market.

The UK pound, on the other hand, is at its eight-month high against the euro, which analysts have partially attributed to improving vaccination prospects. About 5 million people made their first shots, which has doubled in the past week.

Shamicdal, chief economist at BNY Mellon (NYSE :), expects double-digit GDP recovery in the UK and the US, but points out that the eurozone is slowing.

“The outlook is a bit cloudy because it’s more difficult in the euro area and it looks like it takes longer to get herd immunity (because of the slow vaccine program),” he added.

The euro area is currently lagging behind Britain and Israel in terms of per capita coverage, Germany has extended its hard lockdown until February 14, and France and the Netherlands are moving to impose curfew. I am.

Jack Allen-Reynolds, senior European economist at Capital Economics, said vaccine progress was slow and the blockade revised the 2021 Eurozone GDP forecast to 4% percentage points overall.

“GDP is expected to return to pre-pandemic levels around 2022 … The general story is that the euro area will recover more slowly than the United States and the United Kingdom.”

The United States, which launched immunization of its population last month, is also vaccinated at a rate of about 5 per 100 people, ahead of most other major economies.

Deutsche Bank said 70 million Americans would have been vaccinated around April at current rates. This is a threshold to protect the most vulnerable people.

Eric Baurmeister, Head of Emerging Markets Fixed Income Morgan Stanley (NYSE :) Investment management emphasizes the risks to vaccine trading and keeps in mind that the market appears to be more or less recovering in price normality, leaving room for disappointment.

Broadly speaking, there is a view that consumers will eventually divert their savings to travel, shopping and entertainment against the backdrop of abundant stimuli. Meanwhile, investors are only trying to capture market movements when the blockade is eased, said Hans Peterson, global head of asset allocation for SEB Investment Management.

“All (market) movements now depend on the slow pace of infection,” Peterson said. “If that goes back, we need to go back to investing in FAANGS (US tech stocks).

(Graphics: New surge in COVID-19 across Europe-https: //

Vaccines drive investor sentiment, not data, not corporate profits Reuters Vaccines drive investor sentiment, not data, not corporate profits Reuters

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