Stock markets have rocketed on Monday in the US after Pfizer said early data showed its coronavirus vaccine is effective and investors breathed a sigh of relief after days of presidential limbo ended with Democrat Joe Biden declared the President-elect.
Markets were already sharply higher on the election result when Pfizer said on Monday morning in the US that vaccine shots may be 90 per cent effective at preventing COVID-19, indicating the company is on track this month to file an emergency use application with US regulators.
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.
Dow futures jumped 4.2 per cent higher while those for the S&P 500 rose 3.1 per cent on Monday morning in the US (Tuesday AEDT).
In Europe, France’s CAC 40 jumped 5.6 per cent to 5239, while Germany’s DAX surged 5.1 per cent to 13,112. Britain’s FTSE 100 gained 4 per cent to 6,145.
Markets were already buoyant about the result of the US elections, which saw Biden win the presidency.
“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 US trading partners, especially China, in the past several years.
The European Union pressed ahead on Monday with plans to impose tariffs and other penalties on up to $US4 billion ($5.5 billion) worth of US goods and services over illegal American support for plane maker Boeing. That followed a World Trade Organisation ruling in the US’s favour over EU support for Airbus.
In Asian trading, Japan’s Nikkei 225 surged 2.1 per cent to finish at 24,839.84. Australia’s S&P/ASX 200 added 1.8 per cent to 6,298.80. South Korea’s Kospi advanced 1.3 per cent to 2,447.20. Hong Kong’s Hang Seng rose 1.2 per cent to 26,016.17, while the Shanghai Composite gained 1.9 per cent to 3,373.73.
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.
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 on 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 per cent over a year earlier to $US237.2 billion, up from September’s 9.9 per cent gain, while imports rose 4.7 per cent by value to $US178.7 billion, decelerating from the previous month’s 13.2 per cent surge.
Biden has vowed to move decisively to try to counter the worsening coronavirus pandemic, which has sapped economic growth, trade and travel, as the US and Europe face a troubling rise in infections. Even if the strictest lockdowns don’t return in the United States, the worsening pandemic may dampen consumption and erase profits.
In energy trading, US benchmark crude gained $US3.16 to $US40.30 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose $US3.08 to $US42.53 a barrel.
The dollar rose to 104.38 Japanese yen from 103.35 yen late Friday. The euro cost $US1.1889, up from $US1.1875.
Source: Thanks smh.com