Vaccine prompts stock market commotion

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The Pfizer and BioNTech joint vaccine has been found to be more than 90% effective sparking investors to flood into global markets.

On Monday, Pfizer (NYSE: PFE) and German biotech company BioNTech (NASDAQ: BNTX) announced their vaccine candidate was found to have “more than 90% efficacy”. The mRNA vaccine candidate surpassed the FDA target of 50% efficacy by a significant margin, putting the vaccine on track to be rolled out by Christmas pending confirmatory safety studies.

The vaccine described by Prof. Ugur Sahin, the BioNTech CEO and Co-founder as being “a victory for innovation, science and a global collaborative effort”, is in phase 3 clinical trials with over 43,000 participants. The vaccine has had no adverse reactions or efficacy concerns reported by the independent Data Monitoring Committee (DMC) and will be submitted to the FDA for emergency use authorisation in the third week of November.

Meanwhile, with markets already positive about the news of Jo Biden winning the US general election last week. New intraday trading highs were reached on the Dow Jones rising 4.5%. US stocks jumped with the Dow Jones and S&P 500 closing up 2.95% and 1.17% respectively. The tech-heavy NASDAQ closed down 1.53% reflecting the sentiment towards the stay-at-home shares that have so far benefited from the pandemic.

Pfizer shares surged 7.6%, while BioNtech’s increased 13.8%. Airlines and cruise companies were some of the industries drastically affected by the pandemic. Some of the winners on Monday included airline stocks; shares in Delta, American and British Airways group owner IAG rising more than 15%. Royal Caribbean rose nearly 30% and Rolls Royce, the UK jet engine manufacturer and designer, performed well with a 40% increase.

Oil has suffered this year with global demand issues caused by lockdowns. This was made worse at the start of the pandemic by a supply increase from Saudi Arabia and Russia. The commodity briefly went into negative territory in April due to storage concerns from the oil glut created by the 2 countries. Both West Texas Intermediate crude and Brent Crude rose more than 8% on Monday, recording the biggest daily gains in more than five months. Prices were also boosted by Saudi Arabia’s energy minister commenting that OPEC could “tweak” their supply cut pact if demand slumps before the vaccine is available.

US Treasury yields surged in response to the announcement with 10-year yields up by 0.11% to 0.93%. Bond yields move inversely to prices, reflecting the change in mood of investors who are selling their safer bonds to invest in riskier assets. The US 10-year yields could potentially start their rise towards 1.5%, which was the level before the pandemic.

Banks which make more profit from higher bond yields benefited from the news. Citi Group and JPMorgan rose by more than 10%. More specifically the SPDR S&P Regional Banking ETF which offers investors exposure to the regional banks segment of the S&P total market, rose by more than 14%.  

Tech stocks suffered losses on Monday with Zoom, the video-conferencing company, dropping nearly 20%. The shares have experienced explosive growth since the start of the pandemic with the company reporting 335% year on year growth earlier in August. Other Tech stocks also saw their share prices stay stagnant or decline.

Gold, viewed by many investors as a safe place to store wealth, has performed well in 2020 and was trading close to record highs in most currencies earlier in the year. The Spot Gold price declined 5.1% to £1,852.82 an ounce within a few hours of US trading with Gold futures following suit.

Monday was not just difficult for tech and gold investors. The UK’s largest investment platform, Hargreaves Lansdown, reportedly suffered technical problems on Monday after seeing the busiest ever trading day. Interactive Investor, another investment platform, reported that trading was three times higher than average.

The statement from Albert Bourla, Pfizer CEO and chairman that this is a “great day for science and humanity” has been welcomed with a positive response from the markets. However, the vaccine results have not yet been peer reviewed or approved by regulators. Furthermore, there are concerns around the distribution temperature of -70 degrees Celsius which could prove a challenge should the vaccine be approved.

Photo: Independent