Stocks surge on Pfizer vaccine breakthrough and Joe Biden victory

Watch: Global stocks soar on Pfizer Covid-19 vaccine news

Stock markets surged higher around the world on Monday, as investors welcomed a breakthrough in Pfizer’s coronavirus vaccine trials and the US election results.

Stocks spiked as pharmaceutical giant Pfizer said a vaccine trial had been a “success.” Pfizer and BioNTech said their vaccine candidate had demonstrated its “efficacy,” with a 90% prevention rate in a study with 94 participants who had not been infected before.

READ MORE: COVID-19 vaccine: BioNTech and Pfizer report 90% effectiveness in trials

“Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19,” said Dr. Albert Bourla, Pfizer Chairman and CEO.

Shares in companies hammered by the virus this year skyrocketed, with travel, banks, energy, and hospitality stocks posting significant gains on hopes of recovery.

MSCI’s index of global shares hit a record high, while the pan-European Stoxx 600 (^STOXX) hit its highest level in eight months, up as much as 4.3% on Monday.

Britain’s FTSE 100 (^FTSE) and France’s CAC 40 (^FCHI) already up 1.6% at the open in response to the US election, saw a sudden spike on the Pfizer news, closing significantly higher on the previous day. The FTSE closed 4.7% higher, the CAC was up 7.6% and Germany’s DAX (^GDAXI) was up 4.9%.

Stocks in the US also surged, with the S&P 500 (^GSPC) up 2.9%, the Dow (^DJI) up 3.9%, and the Nasdaq (^IXIC) up 1.2% by mid-morning on Wall Street.

“Pfizer’s Covid-19 vaccine news has acted like a shot of adrenaline for the markets, triggering one of the biggest single day movements in global equities for a long time,” said Russ Mould, investment director at AJ Bell.

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Dozens of UK firms saw immediate double-digit gains in their share prices, including:

“A successful vaccine has greater significance than Joe Biden winning the US election as it would effectively pave the way to restarting economic growth globally,” added Mould.

Brent crude prices (BZ=F) also jumped 7.9% on expectations of higher demand, assuming a vaccine rollout and resurgence in economic activity. Meanwhile Wall Street futures were pointing to a bounce in the US later in the day.

Equity markets had already posted significant gains last week as US voters went to the polls and ballots were counted, but Monday marks the first trading day since the race was called for the Democrat former vice-president.

READ MORE: COVID-19 vaccine: BioNTech and Pfizer report 90% effectiveness in trials

In Asia, Japan’s Nikkei (^N225) had closed 2.1% higher overnight at a 29-year high before the Pfizer news, while China’s SSE Composite Index (000001.SS) rose 1.9%. South Korean stocks rose to their highest level in more than two years, with the KOSPI up 0.5% (^KOSPI).

Meanwhile Indian stocks hit record highs on Monday even before the vaccine news , with the Nifty 50 (^NSEI) rising 1.4%. It came after a report Biden could reform work visas, making it easier for Indians to work in the US.

Neil Wilson, chief analyst at Markets.com, said: "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."

Watch: Joe Biden has won the US election so what happens now?

“While President Trump still appears to be in denial about the loss of the Presidency to the Democrats and Joe Biden and still refusing to concede, markets appear to be unconcerned about the prospect of a contested outcome, and now appear to have moved on to what might happen next,” said Michael Hewson, chief market analyst at CMC Markets UK.

Milan Cutvokic, market analyst at Axi, added: “Donald Trump is unlikely to accept his defeat that easily and he will continue to dispute the results until the bitter end. Nevertheless, it is already clear that the odds of him being able to change the outcome are very slim.

"With Biden in the White House, relations with key trade partners are likely to improve.”

Meanwhile, Goldman Sachs strategist Dominic Wilson estimates that if a COVID-19 vaccine doesn’t begin to be distributed until after the first quarter of next year, the S&P 500 could drop 11.4%.