In any normal year, you’d be forgiven for thinking that the ousting of Donald Trump and the election of Joe Biden as President of the United States would be the dominant force in the global financial markets.
However, this (and an unbelievable fallout that has seen Trump contest the legality of the election and its results) has been overshadowed by the development of potential Covid-19 vaccines, which have produced excellent results during the testing process.
The most advanced treatment has been developed by BioNTech and Pfizer Inc., with this having demonstrated that it can protect more than 90% of people from contracting symptomatic coronavirus in a Phase 3 clinical trial. We’ll explore this below, while appraising the reaction of the financial markets (both now and in the future).
How have BioNTech and Pfizer’s Shares Been Affected?
Of course, the most immediate beneficiaries of the vaccine development have been its creators; namely BioNTech (BNTX) and Pfizer (PFE).
Both companies saw their share prices and values soar significantly in the immediate aftermath of the announcement, with BNTX up +9.62%. This equity gained 7.7% at the beginning of last week alone, while further hikes have been forecast as the vaccine progresses to the point where it can be rolled out.
As for PFE pricing, this increased by +1.40, with this stock up by a similarly impressive 7.6% during the same time period.
Unsurprisingly, the impact of this announcement was compounded by the decision of numerous states to confirm Joe Biden’s victory and his status as President Election in the US, as the Trump Administration’s desparate attempts to overturn his defeat increasingly fall on deaf ears.
As a result of this, US stock-index futures also soared exponentially prior to the market opening last week, while steady growth has been reported since.
Will the Vaccine Continue to Deliver an Economic Boost?
While equity and futures markets were clearly buoyed by the news of a successful Phase 3 vaccine trial by BioNTech and Pfizer, commentators have been quick to point out that the 90% efficacy claim is preliminary at this stage.
However, more information is likely to emerge at the end of November, with this set to pertain to efficiency, safety and the underlying manufacturing process. At this stage, it has the capacity to apply for authorisation of emergency use in the US, at which stage both currency and equity markets should see more sustained and reliable growth.
According to Arthur Idiatulin from the broker Tickmill, it was the small-cap Russell 2000 index that rose most prominently last month, followed closely by larger-cap entities such as the Dow Jones and the S&P 500.
Conversely, Nasdaq futures tanked, with these observations suggesting that smaller and potentially undervalued growth stocks will soar in the wake of a vaccine (while established tech shares will continue to stagnate).
This is definitely something for investors to consider in the near-term, with small and mid-cap stocks likely to offer greater value as the global economy and financial markets are empowered by the rollout of a viable vaccine and poised to recover in the first half of 2021.