COVID vaccine sees global markets soar

By Jonathan Jackson. Published at Nov 10, 2020, in Market Wrap

The announcement that Pfizer and BioNTech’s COVID-19 vaccine was 90% effective in tests saw global markets soar overnight.

However, Nigel Green, the chief executive and founder of deVere Group believes global stock markets are “overthinking the positive vaccine news.

Londons’ FTSE 100 soared on Monday by 5.5% and Wall Street benchmark S&P 500 index closed at a two-month high amid strong trading volume.

Mr Green observes: “The news is fuelling hope that economies around the world can soon return to normal and this is driving global stock markets.

“The vaccine development reports are, obviously, an important step in the right direction.

“However, I suspect the markets – which are already in a bullish mood due to the incoming Biden administration – are overthinking the positive vaccine news.

“They are being premature in their buoyancy.

“There’s a long road ahead still. We will find out on the third week of November then as we wait to see if the vaccine can be approved or not.”

He cautions: “Stocks, including beleaguered travel sector stocks amongst others, are soaring on the back of the news.

“But I would urge investors to remain optimistically cautious and avoid the ‘buy everything’ mindset

“The world is still readjusting and many of the changes that have come about from the pandemic are unlikely to be reversed, including the workplace revolution in which more and more people are working from home.”

While stocks did climb, bonds tumbled, but volatility remains in the US with Donald Trump contesting the election result, and President elect Joe Biden set to implement stricter COVID policies.

Joshua Mahony, Senior Market Analyst at IG, discusses a Biden victory below.

“Another day of gains across global stocks comes as the dust settles on the US election. While coronavirus risks remain, the prospect of a less combative President helps global growth prospects.

“Meanwhile, the UK markets are being led by housing names after positive news from Taylor Wimpey and Countrywide. European markets are on the rise once again, with global stocks looking to carry on the bullish tone set throughout much of last week.

“Joe Biden may still have a host of law-suits from Trump to contend with, yet the risk-on sentiment we are seeing throughout markets highlights a confidence within the trading community that these legal challenges are nothing more than a bid to save face.

“Trump may hope that an extended legal challenge will push the decision into the hands of the Republican dominated supreme court, much like the 2000 election.

“However, while the Gore-Bush election was almost too-close-to-call, the 290-214 loss for Trump leaves little uncertainty over who has won this time around.

“Outside of the US, Biden’s victory is expected to mark a break from the combative approach of his predecessor, with trade relations likely to improve after years of tariffs and threats.

“Instead, we are seeing a risk-on surge across global markets, with the change in leadership expected to bring lower tariffs, and higher stimulus. However, Biden’s immediate decision to form a coronavirus taskforce does highlight the more pressing risk, with his leadership raising the likeliness of a nationwide lockdown as US cases top 10-million for the first time.”

Tickers

Dow +2.95%

S&P 500 +1.17%

Nasdaq -1.53%

FTSE 100 +4.67%

DAX +4.94%

CAC 40 +7.57%

Asia Dow +1.06%

Nikkei 225 2.12%

Hang Seng 1.18%


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