Wall Street starts the week with a big bang over the vaccine results. Asian markets jump in hopes of the coronavirus vaccine.
The Dow Jones catapulted over 900 points yesterday, a big move to last week’s recent high, on reports about Moderna recording positive data in its pioneer coronavirus vaccine trials.
Stocks in Asia followed through with its euphoric rally with markets flying from around one percent to 2.5% to start the week following the recent China developments.
Hong Kong’s Hang Seng index closed 1.89% while Mainland Chinese stocks edged higher on the day, with the Shanghai composite up 0.81% to about 2,898.58. Meanwhile, the Shenzhen component rose 1.21% to 11,052.85.
Over in the Pacific, Australia’s S&P/ASX 200 advanced 1.81% to close at 5,559.50.
Cramer: Don’t get too optimistic with Moderna’s vaccine progress
In the last episode of CNBC Mad Money, Jim Cramer advised the investing public not to celebrate since the world is not out of the woods yet.
However, he suggested a barbell strategy in picking stocks wherein investors should buy companies that fit into two likely scenarios and avoid the ones in between. To put it into an investment context, he advises looking for companies that can work in the pandemic and those that will work in the pandemic aftermath.
As for the recent data that Moderna released, he wasn’t too hyped about it as he tells his viewers:
“This data doesn’t prove anything, it just suggests that Moderna might be on the right track […] If we can get it sooner than expected, this could be one of the shortest recessions in history, even as it will also be maybe the sharpest.”
He also added that aside from the Moderna hype this week, Fed Chairman Jerome Powell’s comments on its last interview on CBS 60 Minutes about the Fed having “a lot of ammunition” has sparked overconfidence over Wall Street.
Are the U.S. markets going into a “frustration” rally?
Experts are claiming that the rally in Wall Street is actually a mix of frustration and false hopes.
JPMorgan Chase CEO Jamie Dimon said in a memo that the coronavirus crisis should be used to build an economy that offers opportunities to more people. He also added that the crisis also serves as a wake-up call for businesses and governments to think about how to help and invest for the common good.
On the other hand, Canaccord Genuity’s Tony Dwyver tells CNBC’s Trading Nation that the Dow Jones’ massive rally was part of a panic phase. This is where the market suddenly goes to a sharp downtrend indicating a “panic” and when it gets historically oversold, that’s where it sets up for a relief rally.
The week is just getting started and we have yet to see what Wall Street will bring to the table along with the global markets.