Thank you, Pfizer
Thank you, Pfizer
Stocks are up on positive vaccine news from a collaborative effort from Pfizer and BioNTech SE, showing that it prevented 90% of symptomatic infections in the trial of thousands of volunteers. Pfizer shares rose as much as 15% on intraday trading.
S&P 500 in Blue, Dow Jones in Teal and NASDAQ in Blue
Pfizer vaccine Boosting Stocks
NASDAQ was up nearly 4% at its peak intraday; however, it retracted back slowly. However, the Dow Jones and S&P 500 were up 4.73% and 3.55%, respectively. Many tech stocks were generally muted. However, cyclical and value equities are up the most today, with JP Morgan Chase and Visa up 12% and 9.3%, respectively.
Pfizer also boosting Oil
WTI and Brent Crude were the big winners today, with the black gold up nearly 10% today on the vaccine news, stoking positive sentiment in oil as a vaccine would allow the start of global and domestic travel.
Gold is down nearly 5% on strong risk-on sentiment, altogether breaking away from the correlation with equities it had earlier this year.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, stated that the effectiveness of more than 90% “is just extraordinary.” Furthermore, Peter Jay Hotez, a vaccine researcher and dean of the National School of Tropical Medicine at Baylor College of Medicine stated that the vaccine “so far, it looks like it is promising” and that “it helps provide proof of concepts that it is possible to make a human Covid-19 vaccine.”
Pfizer could have vaccine before year-end
If the Phizer and BioNTech SE collaboration can generate efficacy and safety results in the next couple of weeks, we may see two vaccines in the U.S. by around year-end.
This is important, as this gives a hint for the future in risk-on markets. Alongside a Joe Biden victory, the markets have shown they want a vaccine to push further higher. Ajay Rajadhyashka, head of macro research at Barclays, said that the 90% efficiency rate prove correct. It “increases the odds of a quicker return to normalcy.”
Many countries have pre-ordered a significant number of doses to a successful and approved vaccine, including New Zealand, U.K., and Japan – with enough orders to make herd immunity a possibility in these countries.
With fiscal and monetary stimulus, alongside many consumers have saved money during the quarantine periods and working from home, pent up demand will likely be high. Furthermore, investors that have been on the sidelines may see this as an opportunity to exit bonds and cash and enter back into the equity markets.
Before today, the markets knew that a vaccine would instigate a risk-on rally. Today, however, they were teased with what a successful vaccine will do to the markets. They are currently pricing in a vaccine before the year-end. Anything less, and the market will be disappointed. Really disappointed.
As a trader, it’s a general rule of thumb that we should always be looking to maximise potential returns (per unit of risk) with each transaction. We should always be looking to squeeze as much out of the market as we can. There are times when this can occur by simply letting the trade run its course. However, sometimes market conditions align perfectly for savvy traders to “press the trade” or “pyramid” into the trade.
According to Federal Reserve Chair Jerome Powell, a “decent” September NFP would be needed for the Fed’s planned bond-buying slowdown (tapering) to remain on track for November. Without Powell’s definition of “decent” or a stated value that meets that definition, the market might have to scramble to figure out what the September NFP will mean for the Fed’s tapering roadmap.
On the day that the whistleblower story broke, Monday 4 October, FB stock fell 2.77%. Coincidently, it should be noted that Facebook and its family of apps experienced a 7-hour outage on the very same day that may have heightened investors’ concerns about the stock. By the close of Wednesday, at the time of writing, Facebook has almost clawed itself back to its Monday opening price. FB stock rose 1.33% on Tuesday and another 1.18% on Wednesday.
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