Stocks rise over Pfizer’s Covid vaccine
THE rally in global equities extended Tuesday, a day after Pfizer said its late-stage trial of its Covid-19 vaccine had shown promising results, but caution over the depth of the coronavirus pandemic and an uncertain US political climate limited gain.
Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose 0,5 percent, indicating that blue-chip shares might prolong Monday’s rally that lifted the benchmark indexes toward record highs.
There is still a long way to go until a vaccine might be widely rolled out. But Pfizer’s announcement “gives investors some hope that a vaccine could arrive sooner than anticipated, and pave the way to some kind of normality,” Milan Cutkovic, a market analyst at Axi, said.
Mark Haefele, the chief investment officer at UBS Global Wealth Management, said the market’s reaction highlighted the need for investors to diversify for the next leg toward more cyclical parts of the market that had lagged in 2020 and away from big tech and the primary stay-at-home beneficiaries.
He said the next leg up in stocks would be driven by an end to US political uncertainty and the sustainable increase in global mobility that a vaccine could bring.
After positive vaccine news, the S&P 500 climbed about four percent in early New York trading, reaching a record high.
But after Senate Majority Leader Mitch McConnell declined to acknowledge President-elect Joe Biden’s victory in last week’s election, the index surrendered a lot of those gains, finishing only 1,2 percent higher.
McConnell said President Donald Trump was “100 percent within his rights” to investigate any voting irregularities and weigh his legal options.
US Attorney General Bill Barr has authorised federal prosecutors to begin investigations into voter fraud and irregularities, in a major break from American political norms.
Investors may not be taking this too seriously, however, Connor Campbell, a financial analyst at SpreadEx, said.
In the US, the biggest winner was the energy sector, rising about 14 percent because of surging oil prices, Deutsche Bank analysts said.
Tech stocks lagged after Zoom fell 20 percent along with other stay-at-home stocks including Netflix and Clorox. Cruise and airline stocks saw optimism return.
In Europe, Rolls-Royce was the top performer on London’s FTSE 100, rising 24 percent, followed by British Airways’ owner, IAG, which rose 6,6 percent.
A large part of the region is still in partial or full lockdown, and Cutkovic said that for the sake of consumer and business confidence it was crucial to avoid a back-and-forth between different restriction levels.
The FTSE 100 rose one percent, while the Euro Stoxx 50 index of top eurozone stocks rose 0,5 percent and Germany’s DAX fell 0,2 percent.
China’s Shanghai Composite fell 0,4 percent after data showed consumer prices rose at their slowest pace in over a decade in October, but both Japan’s Topix and Hong Kong’s Hang Seng rose one percent at the close.
Oil extended Monday’s gains. Brent crude futures rose 1,6 percent to $43,08 a barrel, while West Texas Intermediate crude gained 1,4 percent to trade at about $40,87 a barrel.
Gold rose 1,4 percent to about $1 897,85 an ounce, recouping some of Monday’s five percent drop.