Before the trading day closed yesterday, the US stocks significantly increased due to the news of successful trials of COVID-19 vaccine and Joe Biden's announcement that he won the presidential election.
It should be recalled that the German bioengineering company BioNTech and the American pharmaceutical giant Pfizer announced yesterday a successful third phase of clinical trials of a vaccine against coronavirus. Its effectiveness has exceeded all expectations and has shown a positive result in more than 90% of tests on volunteers. Therefore, manufacturers plan to apply for registration of the vaccine already this month.
There is no doubt that such positive news in solving an issue that can easily put the entire world economy on its back caused a positive reaction from market participants and to the life of outsiders due to the pandemic (airlines, banks, travel companies). At the same time, the securities of firms that managed to earn money during the growth of COVID-19 (large technology companies), significantly lagged behind the rest of the market yesterday. In turn, shares of Pfizer, the pharmaceutical Corporation that gave the world hope for an effective vaccine, surged to $2.80 (7.7%) and amounted to $39.20 today.
The second reason for the positive dynamics of the markets was the self-announcement of Mr. Biden as the new US president last Saturday. Many leading American media have already reported about this, however, the stubborn Mr. Trump said that the elections were not over yet and he intends to defend his victory in court.
In view of these positive events, investors got lucky and so the market was optimistic. The US stocks set new records – the previous winners and losers switched places.
So, at the beginning of the trading session, the Dow Jones Industrial Average and S&P 500 set intraday records, while the DJIA did not reach the 30 thousand mark at some point, but only 70 points. As a result, the Dow Jones surged 2.9% (to 29,157.97 points), reaching its highest level since February. Meanwhile, the S&P 500 Index gained 1.2%, stopping at 3,550.50 points, which is the second highest level on the basis of trading on record. However, the NASDAQ index of high-tech companies ignored the general dynamics and showed a decline of 1.54%, reaching 11,711.96 points.
The positive news affected more than just stock markets. Here, the yield on 10-year US government bonds also rose to 0.957% from Friday's 0.821%, and the December futures for the price of WTI crude oil rose by 8.5% and reached $ 40.29 per barrel.
On the other hand, investors showed quite weak interest in safe-haven assets, which have enjoyed desirable popularity over the past few weeks. The Japanese yen declined by 1.9% against the US dollar. In connection to this, the USD/JPY currency pair fell to 105.35. Meanwhile, gold's price fell 5% - 1853.20 per troy ounce, the largest one-day percentage drop in seven years. Nevertheless, the yield on 10-year German government bonds showed the highest growth since March, rising to 0.51%. The European Stoxx Europe 600 is also up by 4%.
Monday also includes records on the Asia-Pacific markets. We have here China's Shanghai Composite, which gained 1.9%, Hong Kong's Hang Seng by 1.2%, and Japan's Nikkei 225 by 2.1%, closing at a new 29-year high.
Global investors are hoping that the administration of the new American President, Joe Biden, will adhere to a more predictable foreign policy and will not seek to impose duties or unexpectedly escalate tensions with China.
Many analysts consider the Democratic leader's victory favorable for the Asian region as well. This condition significantly reduces the probability of higher trade duties and new shocks.