Stocks Pull Back as Vaccine Rally Falters
After a week of impressive market gains, resurgent COVID-19 cases have brought investor caution back.
Global stocks slid back on Friday as a surge in European and US COVID-19 hospitalisations dampened investor enthusiasm after a week of vaccine-spurred optimism.
However, news from Edison Research that President-elect Biden was set to cement his election victory in Arizona looked to give the US market a firm opening. S&P 500 and Nasdaq futures were both up 0.9%, while Dow Jones futures rose 1%.
European stocks fared worse as COVID-19 hospitalisaions rose to a record level in France, while the daily infection rate in the UK surged more than 50% to over 33,000. The UK’s FTSE 100 was down 0.1% as trading opened, while Germany’s DAX was up 0.4% and France’s CAC 40 gained 0.6%, with analysts reporting that investors were torn between fears over rising COVID-19 cases and optimism over Pfizer and BioNTech’s COVID-19 vaccine candidate.
Michael Hewson, chief market analyst at CMC Markets, linked dwindling investor enthusiasm in Europe directly to the ongoing COVID-19 pandemic. “With both France and the UK already in the midst of a temporary lockdown, there is a concern that unless the case rate slows, any relaxation of restrictions could take longer to unfold, and increase the longer term potential for economic damage along with that,” he said.
Elsewhere, Asian stocks fell overnight, with Japan’s Nikkei shedding 0.5% while the Hong Kong Hang Seng and the Shanghai Composite fell by 0.3% and 0.8% respectively. With Australia’s ASX 200 also falling 0.2%, the only major Australasian index trending positively was South Korea’s KOSPI, which rose 0.7%.
While global stocks have seen a boom week following the announcement of Pfizer’s effective vaccine candidate, the heads of the Federal Reserve, ECB and Bank of England all warned late on Thursday that even an effective vaccine would not immediately end the social and economic impact of the pandemic.