Led by the Dow Jones, global equities surged on the announcement that the Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) vaccine candidate had demonstrated 90% efficacy in testing.
In a statement, the partnerships said that their candidate was, “found to be more than 90% effective in preventing Covid-19 in participants without evidence of prior Sars-CoV-2 infection in the first interim efficacy analysis.”
Following the news, and abandoning the need for nuance, equities added to last week’s progress, and surged once again on Monday. Leading the charge was the French CAC, up over 7.5% during trading, and trailed by the German DAX and UK’s FTSE 100, both up between 4.5% and 5%.
Posting similar progress, the Dow Jones remained bullish, with a combination of Biden fever and vaccine optimism pushing it up to a fresh all-time high – at one point leaping 1,200 points and breaking the 29,500 mark.
Commenting on the uproarious day of trading, and the calming effect the vaccine update has had on 2020’s risk considerations, Edison Group’s Chief Investment Strategist, Alastair George, said:
“The announcement of an efficacious vaccine is the long sought after “game changer” in the battle against covid-19. While it will still be some time before social restrictions can be lifted, investors are skipping to the end of the pandemic movie.”
“With a favourable climax to the US presidential election behind us, 2020’s risks have diminished significantly. In our view, the market rally is firmly backed by the rapidly improving outlook for 2021.”
Though, while indexes such as the Dow Jones may be hitting record highs, and the outlook may be less grey, considerable challenges lay ahead. Indeed, as Kingswood CIO, Rupert Thompson notes, the Pfizer and BioNTech vaccine is “a major step forward but it is not a silver bullet”.
Between transportation, mass production and storage at very cold temperatures, the logistical considerations of rolling out a vaccine at a vast scale are innumerable – and will prove challenging based on the shaky performance of COVID policy implementation to-date. Similarly, we must also consider who will be prioritised for the vaccine, how long immunity will last for and who will actually be willing to be vaccinated. Figuring out these variables will ultimately determine the timeline on suppressing COVID infections and deaths – and ultimately, when life can return to some semblance of normality.
On a brighter note, Mr Thompson adds that: “Today’s vaccine news does make it all the more likely that economies outside China resume their recovery in the new year as vaccines start to be rolled out. This in turn should set the scene for further gains in equities. Near term, however, with equities currently now up as much as 12% in little more than a week and valuations at twenty year highs, the good news seems very much priced in.”