News that a vaccine being trialled by Pfizer for Covid-19 offers more than 90 per cent protection against the virus, which has claimed over 1.2 million lives since January, propelled global equities higher on Monday but bonds and gold lost appeal.
Risk appetite grew and investors pulled out of defensive assets, diverting cash into stocks closely tied to economic growth in the wake of the vaccine breakthrough that may help control the worst pandemic in a century.
The potential breakthrough in the fight against the pandemic could not have come sooner as global Covid-19 infections passed the 50 million mark on Monday. Covid-19 cases in the US alone have crossed 10 million and the country is bracing for record hospitalisations this week.
“The prospect of a vaccine jolted world markets higher,” Shady Elborno, the head of macro strategy at Emirates NBD, said.
The Pfizer news is a “major milestone”, he added, but said “questions remain around how effective the vaccine is for vulnerable groups and how long it will provide immunity”.
There were obvious winners and losers in the wake of the Pfizer announcement on Monday as oil majors and hospitality companies soared along with airline stocks on the prospects of a rebound in demand, while technology shares slumped.
Winners
The S&P 500 Index closed at a two-month high, gaining 1.17 per cent, while the Dow Jones Industrial Average jumped 2.95 per cent. The broad Russell 2000 index gained 3.7 per cent.
The Eurostoxx 50 index advanced 6.4 per cent, Germany's DAX climbed 4.9 per cent and the FTSE 100 rose 4.7 per cent.
The rally on Monday in Asia sputtered on Tuesday, however, as most markets pared gains. The Nikkei 225 was up 0.3 per cent, the Hang Seng was 1.1 per cent higher and the Shanghai index was down 0.6 per cent at 1.15pm UAE time.
"There is no doubt that we could easily see several episodes of this in the coming days and weeks," Naeem Aslam, chief market analyst at Avatrade said. "Yesterday’s stock market rally reminded us of the time when the global stock market reacted to the first potential coronavirus vaccine trial news."
Pfizer stocks climbed 7.7 per cent on Monday. Drug maker Biogen’s shares, which rose as much as 47 per cent last week on experimental Alzheimer’s disease therapy effectiveness, slumped more than 28 per cent.
Shares of Eli Lilly, whose antibody therapy was granted an emergency-use authorisation by US drug regulators for treating Covid-19, gained as much as 5.2 per cent but ended trade 0.3 per cent lower on Monday.
Shares of aircraft manufacturers climbed on hopes that a vaccine will revive travel demand that could help save the aviation industry from the worst crisis in its history. Boeing surged 13.7 per cent on Monday, while Airbus shares also climbed 18.57 per cent. Engine manufacture Rolls-Royce's shares surged more than 40 per cent.
Airline stocks also rose following the Pfizer announcement. Cash-strapped carriers that were forced to ground aircraft and cut jobs or furlough staff are hoping a global inoculation programme will boost demand for travel.
Shares of United Airlines climbed 6.93 per cent, American Airlines Group rose 1.93 per cent while Delta jumped 17 per cent. IAG, the parent company of British Airways, surged more than 25 per cent. On Tuesday, shares in airlines in the Asia-Pacific region also rallied strongly. Singapore Airlines advanced 13 per cent, Cathay Pacific jumped 12.6 per cent, Qantas climbed 8.3 per cent, while Japan Air surged more than 21 per cent.
"Realistically for the first time since the panic of February and March, market participants are starting to seriously think about a normally functioning global economy and how to position for that most-welcome return to normality," James Athey, investment director at Aberdeen Standard Investments, said.
Shares in tourism and hospitality sector companies that had taken a severe hit due to the pandemic also rebounded on Monday. Hyatt Hotels surged 19.8 per cent, Marriott International rose 13.8 per cent, InterContinental Hotels Group and Hilton Hotels rose 12 per cent each, while Walt Disney Corporation shares climbed 11.9 per cent.
Oil prices surged above $40 per barrel on Monday following news of a vaccine breakthrough. Brent crude prices jumped 7.5 per cent on Monday and rose a further 1.9 per cent to $43.19 per barrel by 1.42pm on Tuesday. WTI also continued to climb by 1.6 per cent on Tuesday to $40.94 per barrel after gaining 8.5 per cent on Monday.
ExxonMobil gained 12.6 per cent on Monday, Chevron stocks jumped 11.6 per cent, Total surged 15.1 per cent, while BP in London also advanced 15 per cent.
Losers
The technology-heavy Nasdaq Composite Index declined 1.53 per cent with companies that rallied in the wake of the pandemic losing ground. Amazon led a slide in tech heavyweights, dropping more than 5 per cent on Monday. Netflix also slumped more than 8 per cent. Both Amazon and Netflix have benefitted from global lockdowns as movement restrictions boosted demand for their services. Microsoft dropped 2.38 per cent, while Apple stocks slipped 2 per cent.
Zoom, the California-based video communications and conferencing technology firm, which helped to keep the corporate world connected during the pandemic, slumped more than 17 per cent.
"It is highly likely that work-from-home stocks may continue to face more pressure in the coming days," Mr Aslam said.
Investors shunned bonds as the investment climate turned to a risk on mode. Yields on 10-year US Treasuries traded at the highest levels since March, sending prices lower, while US junk-bond yields fell to a record low, as risk appetite on debt assets grew.
The average yield for the Bloomberg Barclays US corporate high yield index dropped to 4.56 per cent, sinking below the previous record of 4.83 per cent set in June 2014, according to Bloomberg.
Gold, a traditional haven for investors, declined on the improved vaccine outlook, with spot gold prices dropping 5 per cent to $1,854.07 per ounce. It advanced 1.16 per cent on Tuesday to $1,884.72 per ounce.
The%20Crown%20season%205
%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EImelda%20Staunton%2C%20Jonathan%20Pryce%2C%20Lesley%20Manville%2C%20Jonny%20Lee%20Miller%2C%20Dominic%20West%2C%20Elizabeth%20Debicki%2C%20Salim%20Daw%20and%20Khalid%20Abdalla%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EWritten%20by%3A%20%3C%2Fstrong%3EPeter%20Morgan%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%20stars%3C%2Fp%3E%0A
More from Neighbourhood Watch:
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
UAE currency: the story behind the money in your pockets
more from Janine di Giovanni
Mercedes V250 Avantgarde specs
Engine: 2.0-litre in-line four-cylinder turbo
Gearbox: 7-speed automatic
Power: 211hp at 5,500rpm
Torque: 350Nm
Fuel economy, combined: 6.0 l/100 km
Price: Dh235,000
