Today, U.S. markets soared following a promising COVID-19 vaccine and Democrat candidate Joe Biden’s electoral victory. This significant boost is the markets’ strongest opens in months and significantly assisted companies throughout the economy, especially in its hardest-hit sectors. This surge is most prominently seen in the S&P 500 which rose 4.2% and the Dow Jones Industrial Average which soared 5.5%.
Pfizer’s and BioNTech’s announced that their vaccine has proven better in recent pivotal studies. If pending data show the vaccine is safe, Pfizer hopes to ask health regulators for permission to sell the shot by the end of this month. Even though these results are incomplete, they still bring a vaccine closer to getting cleared for widespread use.
As a successful vaccine has the potential to restart parts of the economy impaired by the pandemic, it is no wonder why markets rallied for pandemic losers in the tourism sectors, as shown by Carnival Corp. going up by 28% and American Airlines Group Inc. rising more than 21%. Additionally, shares in Pfizer rose 13%. Therefore, based on the vaccine news, investors are attempting to readjust their economic forecasts by including better economic growth post-pandemic. Conversely, though, economic growth in tourism once more would be disadvantageous to tech companies thriving on virtual experiences and lack of social contact.
The increase in stocks also reflects the much-anticipated results of the U.S. elections. This is further bolstered by expectations that a Democrat-controlled White House and divided Congress could result in moderate policy measures. This includes a lack of volatility and clear foreign and trade policy, without an increase in taxation, overseas tariffs, and regulations. Overall, the feared scenario of a drawn-out contested election has finally diminished, which reduced uncertainty in the markets.
This ease of tension and uncertainty is particularly prevalent for overseas investors, especially in Asia. This consensus is displayed in the fact that China’s Shanghai Composite Index closed 1.9% higher and Hong Kong’s Hang Seng Index rose 1.2%. Additionally, the Chinese yuan rallied to about 6.56 per U.S. dollar and Japan’s Nikkei 225 gained 2.1%.