Stock markets rocketed higher Monday after Pfizer said early research shows its coronavirus vaccine is effective and investors breathed a sigh of relief after days of U.S. presidential limbo ended with Democrat Joe Biden declared the president-elect.
Markets were already sharply higher on the U.S. election result when Pfizer said that data shows vaccine shots may be 90% effective at preventing COVID-19, indicating the company is on track this month to file an emergency-use application with U.S. regulators.
The S&P 500 escalated 3.6%, to more than 3,600, shortly after the market opened, topping its previous record intraday high of 3,588 from September, and its record closing high from that same date. The Dow Jones industrial average gained 1,488 points, or 5.3%, to an all-time high of more than 29,800. The Dow’s previous record intraday high was 29,568 in February.
Any economic recovery depends on checking the pandemic, and investors pounced upon the news. Pfizer’s data is only preliminary and does not mean a vaccine is imminent. Getting the vaccine to billions of people will be a massive undertaking, even if it is approved.
In Europe, France’s CAC 40 jumped 5.6%, to 5,239, while Germany’s DAX surged 5.1% to 13,112. Britain’s FTSE 100 gained 4% to 6,145.
Markets were already buoyant about the result of the U.S. elections, which saw Biden win the presidency and a strong chance of Republicans maintaining the Senate.
“This means less uncertainty, less turmoil in terms of foreign relations, and reversal of some futile policies which were put by the Trump administration,” Naeem Aslam, chief market analyst at Ava Trade, said in a commentary.
Many analysts expect trade tensions to de-escalate under a Biden presidency. Still, not all trade tensions are expected to vanish even if Biden rolls back some of the tariffs imposed by President Donald Trump on U.S. trading partners, especially China, in the past several years.
The European Union pressed ahead Monday with plans to impose tariffs and other penalties on up to $4 billion worth of U.S. goods and services over illegal American support for plane maker Boeing. That followed a World Trade Organization ruling in the U.S.’s favor over EU support for Airbus.
For now, investors seem inclined to shrug off Trump’s refusal to concede and threats of legal action. With Republicans expected to retain their grip on a majority in the Senate, they are betting on continuity in tax, regulatory and other policies, analysts said.
“Trump not conceding a loss is near-term noise looking to wrong-foot Biden at the start of his presidency while Republicans in a position to not concede ground on legislation may continue to frustrate Biden’s agenda,” Mizuho Bank said in a commentary.
If Republicans remain in charge of the Senate, chances for a big package of economic aid are weaker, and the Federal Reserve will likely need to step up with more support, said Jeffrey Halley of Oanda.
“If Republicans remain in charge of the Senate, chances for a big package of economic aid are weaker, and the Federal Reserve will likely need to step up with more support, said Jeffrey Halley of Oanda.
However, with the Senate in GOP hands, many investors are pleased that Biden will have a tougher time passing legislation unfriendly to the market, such as raising corporate taxes.
Despite rising infections and deaths from the pandemic, economies have continued to recover from the shocks of earlier shutdowns to combat outbreaks.
Customs data released Saturday showed China’s export growth accelerated in October, boosting the total so far this year back above pre-coronavirus levels for the first time. Exports in October rose 11.4% over a year earlier to $237.2 billion, up from September’s 9.9% gain, while imports rose 4.7% by value to $178.7 billion, decelerating from the previous month’s 13.2% surge.