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Pfizer have announced their vaccine candidate is 90% effective, news that sent investors rushing into stocks as a trifecta of positives met the investment community at the start of the new week.
The Dollar and other 'risk off' currencies fell while 'risk on' currencies such as Sterling, the Australian, Canadian and New Zealand Dollars all gained.
Pfizer and partner BioNtech have said the vaccine is 90% effective in combating COVID-19 and they could finish assessing safety data during the third week of November and are currently on track to seek regulatory approval as early as November.
BioNtech have said they are optimistic that immunisation effect of its vaccine will last for at least a year, although it is not certain yet
In a briefing out on Monday, the Pfizer said they should be able to produce 1.3bln doses, which would be enough to vaccinate 650mln people, by the end of 2021; only 50mln doses are expected to be available in 2020. They are due to provide 10 million doses of its vaccine to the UK by the end of the year if the vaccine is approved, according to The Daily Telegraph.
"Stock markets surged on some extremely positive news from Pfizer and Biontech, who say their vaccine is 90% effective in phase 3 clinical trials. From tracking just under 6,000 all morning the FTSE 100 rallied over 100 points on the news, whilst e-minis went up 70 points or so. The Dow is now seen up 1,300 points – coming on top of the wave of relief from Joe Biden’s victory, it’s proving a spicy cocktail for stocks," says Neil Wilson, Chief Market Analyst at Markets.com.
"The risk-sensitive GBP often benefits when risk appetite rises," says Robert Howard, a Reuters market analyst, on the impact the news has had on Sterling.
Above: GBP/USD four-hour graph
Despite the relative small amount of vaccine in stock - relative to global needs - the Pfizer CEO says they are looking at "out of the box" ways to ramp up manufacturing capacity
UK PM Johnson is to hold a press conference at 17:00 GMT on COVID.
German Health Minister says the vaccine data is very encouraging.
The immediate reaction to the news was a surge in global stock indices as investors bet there was some real light at the end of the tunnel for the world's economy that has been severely hit by lockdowns as government's scrambled to contain the pandemic.
"I won’t lay with lots of comment about the trials as I am no vaccine expert, all I can say is this is a good news day. Whilst we are not there yet, news that this vaccine could be highly effective is the best thing markets could hope for. Public health officials will remind us there is a long road ahead, and many challenges will be faced along the way, but there is an enormous sense of optimism today – light at the end of the tunnel. Let’s just hope the vaccine deniers won’t get in the way, but 2021 just got a lot brighter," says Wilson.
The news on the covid vaccine compliments news that Joe Biden had won the U.S. presidential election, bringing to an end months of political uncertainty.
The accommodative monetary policy settings at the U.S. Federal Reserve and other central banks, when combined with the political and vaccine news have formed something of a trifecta of positivity for global markets.
In an environment of rising stock markets the Dollar would be expected to fall and the 'high beta' currencies such as the Australian Dollar, Canadian Dollar and New Zealand Dollar would be expected to rally. Included in the basket of winners would be emerging market currencies.
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