Shares of banks, oil and travel companies soared on Monday after Pfizer said its experimental COVID-19 vaccine was more than 90 percent effective, prompting investors to shift bets to beaten-down cyclical names from stay-at-home winners.
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Sectors which had been the most hit by lockdowns, travel restrictions and social distancing introduced to curb the spread of COVID-19 made spectacular moves as traders rushed to price what could be a game changer for markets after months of being roiled by the pandemic.
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By the same token, stocks seen as safe havens since the coronavirus started its worldwide deadly spread, sustained heavy losses, such as conferencing platform Zoom Video which or UK food delivery champion Ocado.
“It’s a game-changer because the possibility of a vaccine makes it possible to envisage reopening the economy in 2021 and a strong and sustainable recovery”, said Emmanuel Cau, head of European equity strategy at Barclays.
“A lot of investors were waiting and positioned for this”, he added, noting that Joe Biden’s victory in the US presidential election had also lifted a lot of the uncertainty clouding markets recently.
Europe’s banking index, plagued by low interest rates and the fear of widespread defaults in the corporate world, made its biggest one-day jump since the European sovereign debt crisis in 2011, gaining 10.9 percent.
French banks Societe Generale and BNP Paribas led the way, up 18 percent and 14.5 percent respectively.
On Wall Street, JP Morgan and Bank of America were up over 10 percent in early trades.
European airlines, hard hit by travel restrictions induced by the pandemic, rallied hard, with BA owner IAG, rising close to 40 percent.
Earlier, Britain’s transport minister Grant Shapps told an online airport industry conference that Britain was making “good progress” with a plan to allow COVID-19 tests to shorten a 14-day quarantine period for those returning from abroad.
The pan-European STOXX 600 index, which was already up after Joe Biden’s victory in the US presidential election, jumped 4.5 percent to its highest since March.
Relief was also palpable in commercial real estate with the prospect of malls welcoming hordes of consumers again. French real estate group Klepierre and Unibail rose 36 percent and 22 percent respectively.
The S&P 500 jumped 4 percent to record highs at the open but the Nasdaq, home to the world’s biggest technology stocks, such as Netflix, Amazon, Apple which greatly benefited from consumers change in behavior, made only modest gains of 0.5 percent.