Australia’s local market has started strong on Tuesday after positive news from drug giant Pfizer regarding a late-stage COVID-19 vaccine trial.
The ASX 200 was up 90 points to 6,390 on Tuesday morning after US drugmaker Pfizer and German partner BioNTech said a large-scale trial of their vaccine found it more than 90 per cent effective in preventing the virus.
A week ago, the market was languishing below 6000 points.
The companies that are doing the best are those that will benefit from a fresh burst of economic activity.
This includes the major banks, long-suffering travel companies, such as Qantas, WebJet, HelloWorld, Flight Centre, and shopping centre operators.
The surge in the local market comes was reflected overseas as the S&P 500 ended higher but closed just shy of a record as investors bet a full economic reopening was finally in sight following news of the vaccine trial.
Oil prices also soared and pushed up energy stocks on Monday.
Saturday’s news Joe Biden had won the US presidential election was also a reassuring confirmation of what investors had already been counting on by the end of last week, according to market strategists.
“Election uncertainty is fading into the rearview mirror,” market strategist Michael Antonelli at Baird in Milwaukee said.
“Now we have this boost of investor enthusiasm after the vaccine news.
“All the types of companies that would benefit from us returning to a pre-COVID world are the big winners today.”
‘Not out of the woods’
While the vaccine study is still ongoing and requires approval, Pfizer and BioNTech said they had found no serious safety concerns so far and expected to seek emergency use authorisation later this month.
“It’s not that we’re out of the woods with COVID. It’s that the vaccine starts to remove the worst case scenario that we surge out of control and go back into a national lockdown,” said Antonelli.
“The market’s looking into the future, to the first and second quarter of next year.”
Unofficially, the Dow Jones Industrial Average rose 839.61 points, or 2.96 per cent, to 29,163.01, the S&P 500 gained 44.25 points, or 1.26 per cent, to 3,553.69 and the Nasdaq Composite dropped 162.91 points, or 1.37 per cent, to 11,732.32.
The S&P energy index led gainers among the S&P 500’s 11 major sectors and registered its biggest daily percentage gain in months as investors bet demand would climb again as the public became more comfortable with the idea of travel, with the health crisis subsiding.
Also, bank shares, often seen as a proxy for the broader economy, soared.
The companies hit hardest by months of travel bans and lockdowns surged.
The NYSE airlines index was up 19 per cent while plane maker Boeing Co jumped 15 per cent. Cruise line operator Carnival Corp was up more than 32 per cent.
In contrast, the technology sector and specific companies that had outperformed during the pandemic as they were seen as “stay-at-home” winners were making smaller gains or declining.
Netflix Inc and Amazon.com Inc declined while Zoom Video and exercise bike maker Peloton Interactive Inc tumbled to limit the Nasdaq’s advance.
Stocks around the world had already been gaining ground before the vaccine data pushed equities even higher as expectations of better global trade ties and more monetary stimulus under US President-elect Biden was already lifting demand for risky assets.
Pfizer shares closed sharply higher after soaring as much as 15.4 per cent during the session.