Global stocks rallied due to positive Covid-19 vaccine news
U.S. stocks surged forward on Monday due to more positive news on a coronavirus vaccine. Stocks tied to an economic reopening skyrocketed. On the other hand, vaccine news erased a rally in tech companies where investors had poured money during the lockdown. Furthermore, Treasuries dropped down.
According to reports, Moderna Inc.’s vaccine proved to be 94.5% effective during a large late-stage clinical trial. As a result, S&P 500 contracts rallied alongside those on the Russell 2000 Index after. The shares soared by more than 10% in the pre-market. Meanwhile, other stocks focused on stay-at-home activities, like Peloton Interactive Inc. and Zoom Video Communications Inc. plummeted down.
Delta Air Lines Inc. and Carnival Corp. climbed up by more than 5%. Overall, futures on the S&P 500 Index gained 1%, while the Stoxx Europe 600 Index surged forward by 1.4%. The MSCI Asia Pacific Index also jumped by 1.4%, and the MSCI Emerging Market Index soared by 1.3%.
Optimism last week caused a rotation into value and cyclical sectors, as well as out of more defensive industries. However, the vaccine news added another driver to global stocks. U.S. equity futures rose higher earlier after advisers to President-elect Joe Biden announced that they opposed a nationwide shutdown despite surging Covid-19 cases.
Sean Fenton, the chief investment officer at Sage Capital Pty in Sydney, stated that they see a positive stream of news going forward. With the market looking forward towards eventual reopening, cyclical and value stocks doing better and real yields probably bottoming out, he thinks that’s a momentum that will continue at least over the next three to six months and maybe longer.
Investors stay cautious of pandemic damage
Concerns about a sustainable economic recovery don’t abate amid a surge in coronavirus cases around the world. American coronavirus cases have surpassed 11 million as the pandemic continues to escalate in regions such as the U.S. and Europe. Germany’s economy minister stated that the country must live with “considerable restrictions” against the spread of infections for at least the next four to five months. Investors are looking for Brexit talks to continue as the U.K. and EU approach the latest deadline.
Meanwhile, Asian stocks rallied after several countries signed the world’s largest regional free-trade agreement on Sunday. It encompasses almost a third of the world’s population and gross domestic product. However, Australia’s stock exchange suffered due to a software issue that forced it to close for most of Monday’s session.
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