Despite originating in China, the coronavirus pandemic has taken a heavy human and socio-economic toll in Europe. In fact, the UK has been particularly negatively affected, with well in excess of 41,000 deaths recorded in the region to date.
Europe’s economies have also been adversely affected by the outbreak, while its stocks and the single currency have also entered largely negative territory and seen significant devaluation since the beginning of 2020.
However, these trends are beginning to reverse after the tentative development of a potential coronavirus vaccine, while other developments have also combined to create more positive sentiment and initiate the green shoots of economic growth.
What Impact has the Vaccine (and Other Factors) Had in Recent Times?
In many ways, the European and international markets have responded well to a trifecta of positive news, namely vaccine developments in Europe and Russia and the robust performance of US stocks.
Interestingly, several experimental coronavirus vaccines have developed of late, with the most promising cultivated by Belgian pharmaceutical company Janssen in conjunction with the US biotech company Novavax.
Although each of these vaccines are only at an initial stage, optimism has soared following the decision of the UK government to stockpile more than 340 million doses across four different offerings.
Of course, there’s no guarantee that these vaccines will ultimately deliver success, and the UK is clearly hedging its bets with regards to one of them being successful.
However, there’s no doubt that these recent developments have sent a wave of optimism crashing throughout Europe and its markets, while also empowering the performance of certain commodities.
According to Edward Moya from Oanda, Germany’s recovery expectations jumped to the highest levels since 2004 following the recent news, while the demand for key assets such as oil and gold also soared noticeably.
Appraising the Wider Impact of the Vaccine Breakthroughs
Oil prices are definitely starting to rise in line with the growing demand for crude, with this trend also being empowered by better than expected economic data and stock market growth in the US.
WTI crude is also once again at the top of its range, rising to 42.22 and growing at a marginally faster rate than crude.
Of course, such trends may well stall before the end of Q3, as the aforementioned vaccines will need to pass through further trials and produce official phase three results before driving a sustained uptick in market sentiment.
As for gold, this asset is primed for a short-term sell-off as the market sentiment improves and stocks across the globe inch further towards record highs for the second time in 2020.
Some may argue that the so-called development of a viable vaccine in Russia is also driving this trend, although this announcement was met with a huge level of cynicism given that this drug has also yet to begin phase three trials.
Still, risk-averse traders will continue to seek out gold as a viable safe haven in the current climate, with the market remaining incredibly volatile and uncertain from a longer-term perspective.
In this respect, nothing has really changed for the medium to long-term bullish outlook for gold, while the status quo will most likely be maintained as countries continue to cope with the impact of the coronavirus.