The euphoric rise of global stocks on Monday following news of Pfizer (PFE)-BioNTech’s vaccine was met with a more modest rally on Tuesday.
UK prime minister Boris Johnson described news of the vaccine as “that toot of that bugle [which] is louder but still some way off,” but it did succeed in offering markets a renewed sense of hope.
Further, the US Food and Drug Administration gave Eli Lilly (LLY) the first emergency use authorisation for a COVID-19 antibody treatment on Monday. The drug helps keep patients out of the hospital. The company’s stock rally extended well into after-hours trading, and is expected to continue.
Watch: Global stocks soar on Pfizer Covid-19 vaccine news
“The results of the Pfizer study are certainly welcome news, a 90% success rate is certainly well above expectations, and as such is a very much needed beacon of light in what has been a dark year for the global economy, however one swallow does not make a summer, and there still remains some way to go before life as we knew it a year ago, can return to any semblance of normal, in the short or medium term,” said Michael Hewson, chief market analyst at CMC Markets.
The news comes as the world continues to struggle through second pandemic waves. In the US, New York City mayor Bill de Blasio said the city was “dangerously close” to a second wave, with the positive test rate rising above 2%. In Europe, additional restrictions have been announced in Hungary, which will close restaurants (except takeaways) while secondary schools implement distance learning.
France, the UK, Spain and Poland are under the strictest lockdowns in Europe, according to the Oxford stringency index that assesses indicators such as school and workplace closures, as well as travel bans.
The economic impact of the coronavirus pandemic is also continuing. The Fed warned on Monday in its biannual Financial Stability Report that that the country could face a wave of debt defaults and “significant declines” in asset prices because of COVID-19 and a recession.
“The new record highs for the Dow, S&P500 and Russell 2000 certainly point to a much greater sense of optimism than at any other time this year, however it still doesn’t hurt to exercise a degree of caution, at a time of still highly elevated levels of uncertainty” said Hewson. “There is also the prospect that yesterday’s news could prompt US politicians to pull back in trying to implement further fiscal stimulus measures in the weeks ahead.”
Asian markets were mixed at market close.
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