Major US stock indexes closed yesterday's trading with reported growth amid noticeable progress in the results of research on COVID-19 vaccines.
In this regard, Dow Jones Industrial Average increased by 1.1% (327.79 points) to 29591.27 points, after finishing last week with a decline. The S&P 500 index also grew by 0.6% (20.05 points) up to 3577.59 points, while Nasdaq Composite increased by 0.2% (25.66 points) up to 11880.63 points.
It should be recalled that the results of the study of University of Oxford and AstraZeneca showed their drug 90% effective in preventing infection with COVID-19. The vaccine did not cause any serious side effects in the subjects with any of the treatment regimens. Such promising news instantly gave investors boundless optimism and hope that the release of effective drugs in 2021 will help stop the coronavirus infection and ensure the speedy recovery of the global economy.
Experts are also ready to agree with investors, who say that the prospect of global normalization of economic activity in the second half of next year is becoming more real.
Unlike the drugs of pharmaceutical giants Pfizer and Moderna, it is known that AstraZeneca vaccine does not lose its properties even at temperatures above zero degrees Celsius, which greatly facilitates its transportation and distribution.
However, Pfizer is still hoping to take the lead in saving the world from the pandemic, and as early as late last week, company officials asked the US Food and Drug Administration (FDA) to approve their vaccine. The pharmaceutical corporation said that distribution of Pfizer's vaccines could begin in mid-December.
The vaccine is not the only reason for market participants to be optimistic. We also have the preliminary data which recorded growth in the US business activity in November, showing the highest in more than five years. And all this despite the rising cases of COVID-19 and the tightening of quarantine measures. According to the PMI indices from IHS Markit, activity in the services and manufacturing sectors remains in the growth zone.
In addition, many investors pay attention to the newly elected US President, Joe Biden and his personnel changes. Recently, Mr. Biden announced that he plans to appoint the former head of the Federal Reserve System, Janet Yellen as US Treasury Secretary. It is known that Ms. Yellen announced that she supports the increase in government spending to support the American economy, which has suffered from the consequences of the pandemic.
Despite such positive calls, analysts are greatly worried that the number of COVID-19 cases will increase and this could negatively affect the growth of the US economy in the near future. Its situation is worsened by the fact that the effect of state stimulus measures introduced in the spring is becoming less likely.
Experts warn that unemployment in many sectors of the economy associated with the second wave of COVID-19 could be longer than the market predicted. And even after the availability of an effective vaccine, the consequences and damage of the global pandemic could significantly slow down the global economic recovery.
Last Sunday, the US recorded 142,732 new COVID-19 cases, and the number hospitalized for the 13th day in a row broke previous highs. In Europe, which has decided to take tougher measures to fight COVID-19, restrictions are already having a negative impact on the economy. According to the PMI indices from IHS Markit, business activity in Europe has significantly declined this month, and the worst situation is in France.
But as a result of yesterday's trading, 7 out of 11 sectors of the S&P 500 reported growth. The leading indicators were marked by the industries most sensitive to the economic situation – oil and gas and financial. In the meantime, shares in healthcare and real estate companies were lower.
On the other hand, shares of oil and gas corporations declined this year due to the impact of coronavirus, which caused a sharp slowdown in business activity. Earlier, these stocks received support due to the recovery in oil prices.
The price for Brent crude futures rose by 2.4%, that is, to $ 46.06 per barrel, which is the highest since March this year.
Cruise line operators and airlines also saw strong support from news of an effective vaccine, with Royal Caribbean Group up 4.4% and Carnival and Delta Air Lines up 4.8% and 4.5%, respectively.
AstraZeneca shares lost 3.8% in London. Experts attribute this to investors' disappointment that the drug's performance indicator was lower than that of Pfizer and Moderna. Meanwhile, Moderna shares gained 3.5%, while Pfizer shares fell 0.5%.
At the same time, the pan-European Stoxx Europe 600 lost 0.2%. The yield on 10-year US government bonds rose from Friday's 0.828% to 0.857%.
The Asian markets followed the example of the US stock exchanges and also closed mostly in the positive zone.
Here, Shanghai Composite index fell 0.3% (3,402.82 points), while the Shenzhen Composite index fell 0.3% (2,294.15 points). In turn, Hong Kong's Hang Seng Index rose 0.4% (26588.2points), while South Korea's KOSPI rose 0.58% (2617.76 points). On the other hand, Australia's S&P/ASX 200 also rose 1.26% (6644.1 points) and Japan's Nikkei 225 rose 2.5% (26165.59 points) and showed the highest closing level since mid 1991.
