Pfizer's Covid vaccine effectiveness claims inject hope, lift global stocks

Firms hit hardest by restrictions made most gains, with airlines trading 30% higher

Stocks surged around the world and bonds tumbled after a large-scale coronavirus vaccine study delivered the most-promising results in the battle against the worst pandemic in a century.

Equities came off session highs after Mayor Bill de Blasio said New York City is coming “dangerously close” to a second wave of the coronavirus. 

Still, more than 85 per cent of S&P 500 companies climbed on Monday as the gauge jumped to a record on news that the Covid-19 shot being developed by Pfizer and BioNTech prevented more than 90 per cent of infections. 

The S&P 500 and the Dow hit record highs on Monday as the first successful late-stage clinical trial of a Covid-19 vaccine sparked hopes of the economy emerging from a pandemic-driven crisis.

The blue-chip Dow surged as much as 5.7 per cent, also getting a boost from Joe Biden clinching a tightly-fought presidential election.

The companies hit hardest by months of travel bans and lockdowns soared, with Boeing Co up 12.6 per cent and airlines and cruise line operators all trading 20 per cent to 30 per cent higher. 

Shares that have been hit hard by the economic toll of lockdowns such as small caps, travel stocks and movie theaters soared, with Carnival and Cinemark Holdings surging more than 35 per cent. 

Stay-at-home companies Zoom Video Communications and Peloton Interactive plunged at least 16 per cent on hopes that a return to normal is on the horizon. Online giant Amazon.com retreated.

A credit derivatives index that measures the perceived risk of high yield dropped by the most in seven months, with junk-rated companies hitting the market in droves to take advantage of a plunge in borrowing costs. Oil soared, while gold, the Japanese yen and the Swiss franc slumped.

Investors pulled out of haven assets and poured cash into markets that are closely tied to economic growth, with a gauge of global stocks also hitting a record high.  President-elect Joe Biden on Monday announced a new coronavirus task force as his transition team seeks to fulfill a campaign promise to develop a dramatically different approach than President Donald Trump’s to contain the pandemic. The top infectious disease expert in the US Anthony Fauci said the vaccine being developed by Pfizer will have a “major impact” on everything we do with regards to the coronavirus going forward.

“The bull market has a ton of ammunition to keep going,” said Chris Larkin, MD of trading at E*Trade Financial. “With more certainty around the election, a strong quarter of earnings across many sectors, and extremely positive news on the vaccine front, there is little to hold us back.”  

Elsewhere, the Australian dollar-yen cross — a commonly watched risk barometer — surged by most since June. The Turkish lira soared after the weekend resignation of the country’s economy czar and the dismissal of the central bank chief.