Equity markets see big gains on Monday on Pfizer’s promising COVID-19 vaccine data

The vaccine candidate, known as BNT162, “has emerged as a leader in the tight race and the latest data has been encouraging, although logistics and supply chain challenges remain,” said Cinney Zhang, pharmaceutical industry analyst with Bloomberg Intelligence. .

Pfizer’s shares gained 15%. Its vaccine partner BioNTech did even better, with a 25% increase.

The companies said in a statement early Monday morning that out of about 44,000 people in the phase 3 trial, only 94 have contracted the virus and no serious side effects have been reported so far. This “gives hope that patient demographics are large enough for early approval,” Zhang said.

Any economic recovery depends on controlling the pandemic and investors have pounced on the news. Pfizer’s data is only preliminary and doesn’t mean a vaccine is imminent. Getting the vaccine to billions of people will be a huge undertaking, even if it gets approved.

But even the potential for an effective vaccine on the horizon was all investors needed to shake off some of their doom and sadness.

“Investors could see this as a potentially groundbreaking announcement as shares in some of the industries that had been particularly hammered by COVID have soared, including United Airlines (+ 19.5%), Royal Caribbean Cruises (+ 21.1). %) and MGM Resorts (+ 17.2%) “, said Colin Cieszynski, chief market strategist of SIA Wealth Management in Toronto.

“The moderate overnight gains in the markets turned into explosive gains this morning.”

The Dow Jones Industrial Average opened more than 1,500 points, or 4.2 percent. In Toronto, the S & P / TSX Composite Index rose more than 400 points, or nearly three percent.

Interestingly, the only sector that was lower was technology, as the stocks of the big tech companies that did very well during the pandemic returned some of their gains. Netlfix was down 6%, Amazon was down about 3%, and video conferencing software company Zoom was down 16%, speculating that booming demand for the company’s services may soon drop from its current level.

In Europe, the French CAC 40 jumped 5.6% to 5,239, while the German DAX jumped 5.1% to 13,112. The UK’s FTSE 100 gained 4% to 6,145.

The result of the US elections also helped

Markets were already optimistic about the outcome of the US election, which saw Democrat Joe Biden win the presidency.

“This means less uncertainty, less turbulence in terms of foreign relations and a reversal of some futile policies put in place by the Trump administration,” Naeem Aslam, chief market analyst at Ava Trade, said in a comment.

Many analysts expect trade tensions to ease under Biden’s presidency. However, not all trade tensions are expected to vanish even if Biden withdraws some of the tariffs imposed by President Donald Trump on U.S. trading partners, particularly China, in recent years.

The European Union continued on Monday with plans to impose tariffs and other sanctions on US goods and services worth up to $ 4 billion over US illegal support for aircraft maker Boeing. This followed a World Trade Organization ruling in favor of the United States on EU support for Airbus.

In Asian trading, Japan’s Nikkei 225 was up 2.1% to finish at 24,839.84. Australia’s S & P / ASX 200 added 1.8% to 6,298.80. South Korea’s Kospi advanced 1.3% to 2,447.20. Hong Kong’s Hang Seng was up 1.2% to 26,016.17, while the Shanghai Composite gained 1.9% to 3,373.73.

For now, investors seem inclined to shake off Trump’s refusal to concede and threats of legal action. With Republicans expected to keep their hold on the Senate majority, they are betting on the continuity of fiscal, regulatory and other policies, analysts said.

The price of oil earns $ 3

“Trump not admitting a loss is a short-term rumor trying to get Biden wrong early in his presidency, while Republicans unable to concede ground on legislation may continue to frustrate Biden’s agenda,” Mizuho said. Bank in a comment.

If Republicans remain in office in the Senate, the chances for a large economic aid package are weaker and the Federal Reserve will likely have to step up with more support, Oanda’s Jeffrey Halley said.

“Further easing is almost certainly on the way to the December FOMC meeting,” Halley said, referring to the Fed’s decision-making committee. “More flexible monetary policy equates to higher asset prices in a world with interest rates equal to the zero percent “.

Despite the increase in infections and deaths from the pandemic, economies continued to recover from the shocks of previous arrests to fight epidemics.

Biden vowed to move decisively to try to counter the worsening coronavirus pandemic, which has undermined economic growth, trade and travel, as the United States and Europe face a worrying rise in infections. Even if the tougher lockdowns don’t return to the US, the worsening pandemic could dampen consumption and wipe out profits.

In energy trading, US benchmark crude oil gained more than 10%, or $ 3.16, to $ 40.30 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose by $ 3.08 to $ 42.53 a barrel.