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Financial Market Rally Effect of the Pharma Led Vaccine


December 7, 2020
And it finally happened. The long-awaited coronavirus vaccine is finally here… fresh, on ice ready to be sent to the UK. The UK has ordered 800,000 doses of the jab after finding it safe for use. The country is also the first to approve the vaccine developed by Pfizer and BioNTech. Britain’s medicine regulator, the MHRA, confirmed the jab’s safety.
Financial Market Rally Effect of the Pharma Led Vaccine

Pfizer surged 5%, while BioNTech market Stock leaped 8% when the news broke, partly propelled by Health Secretary Matt Hancock’s comment that “Help is on its way”.

Researching for the Vaccine!

Up to 95% effective in the prevention of coronavirus infections, Pfizer and BioNTech’s vaccine is not the only one out there. Massachusetts-based biotechnology company Moderna also confirmed over 90% efficacy of its COVID vaccine. Moderna applied for FDA approval no earlier than Monday, asking the US drug regulator to review an expanded data set showing the vaccine is 94.1% effective in preventing COVID infections and 100% efficient against severe cases.

“This is striking”, Dr. Paul Offit, member of the FDA vaccine advisory committee said. “These are amazing data”.

While the FDA’s approval for both jabs may take a little more time, in Europe, both Pfizer-BioNTech and Moderna submitted conditional marketing authorization (CMA) with the European Medicines Agency (EMA) last week.

market vaccine ready to heal

According to a press release published by BioNTech, “If EMA concludes that the benefits of the vaccine candidate outweigh its risks in protecting against COVID-19, it will recommend granting a CMA that could potentially enable the use of [the vaccine] in Europe before the end of 2020.”

Most importantly, the Commission has secured around 300 million doses of the Pfizer-BioNTech vaccine and 160 million of Moderna’s jab. In its turn, the UK has secured 40 million doses of BioNTech-Pfizer’s vaccine and 7 million of Moderna’s.

Notwithstanding the positive response, Moderna has said its first 20 million vaccine doses would be made and used for the US, following which a global supply of its vaccine would hopefully take place in 2021. Can we say the end of the pandemic is near? That may be premature to think at this stage, yet the news’ impact on the financial markets was unprecedented.

Equity Markets

Most of the US equity bourses rallied throughout the week, peaking by market close on Friday. All of the major US indices, the S&P500, Dow Jones, and Nasdaq Composite ended the week at record highs, up 0.9%, 0.8%, and 0.7%, respectively from the previous week’s highs.

In addition to the vaccine news that gave investors a shot in the arm, equity markets seem to have been also boosted by the US President-elect Joe Biden’s official reassurance that the stimulus is on its way. Yet the $908 billion stimulus package is still the bone of contention between the Republican Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi, and the time is running out. Should they not find consensus by 11 December, the US is facing another government shutdown.

Meanwhile, house rental giant Airbnb announced the launch of its IPO due Wednesday. The initial public offering is expected to top $30 billion and it will be part of NASDAQ, listed under the ticker symbol ABNB.

Airbnb joins the ranks of multiple big IPOs that have flared up the stock exchanges this year despite the wave of volatility created by the pandemic. Airbnb is a popular travel brand and an industry disruptor, giving many hoteliers a run for their money.

Commodities

Continuing the pharma-led spate of record highs, Western Texas Intermediate crude oil topped $46.08 per barrel while Brent crude soared above $49.24 per barrel as OPEC+ eventually agreed to a scanty output increase of 500,000 barrels per day as of January.

This increase means that the Organization of the Petroleum Exporting Countries (OPEC) and Russia will cut yield by 7.2 million BPD, or 7% of global demand, instead of 7.7 million BPD which accounts for the current cuts, putting both benchmarks on track to their highest levels since March, before most countries went into lockdown.

Gold dropped below $1,850, to 1,838.10 as the US Dollar shows slight signs of recovery despite the modest non-farm payrolls reading on Friday. According to the Bureau of Labor Statistics (BLS), only 245,000 jobs were added to the US labor market in November while the unemployment rate fell to 6.7% from 6.9%, reviving stimulus talks. As a consequence, the US Dollar index (DXY) pared the losses suffered during the last week, closing Friday at 90.81.

Cryptocurrencies

Bitcoin is back in the game. Rallying to $19,857 and beating 2017 December’s record of 19,783, Bitcoin, or “digital gold” as it’s been dubbed by crypto pundits, is set to take on gold in 2021.

A recent poll by deVere Group shows that 67% of 700 Millennial investors enquired, would rather go for Bitcoin as a safe-haven asset than gold. Of note is that the poll came out only days after Bitcoin beat 2017’s record high. Interesting…What would you invest in 2021?


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