Global Markets Sober Up After Vaccine-induced Surge

Financial markets were less giddy Tuesday, but eked out some gains nonetheless and oil prices rose on strong hopes for a coronavirus vaccine.

News from the US pharmaceutical group Pfizer and Germany's BioNTech about excellent phase-three results for their candidate vaccine "seems to have been a game changer, even if experts warn that production and distribution may take time," remarked Fawad Razaqzada, an analyst at ThinkMarkets.

Pfizer and BioNTech announced Monday that their vaccine candidate was 90 percent effective in preventing Covid-19.

The scientific community reacted positively, with US expert Anthony Fauci describing the results as "extraordinary" and World Health Organization boss Tedros Adhanom Ghebreyesus hailing the news as "encouraging."

But others pointed out that data from the ongoing trial still needed review, and that distribution logistics could be challenging as well.

That means the economic benefits from the vaccine likely will not be seen until the second half of next year.

Advances among individual shares were led by companies that have been hammered for most of the year by lockdowns, particularly airlines, while stay-at-home companies like videoconference service Zoom and other tech shares dropped.

In New York, while the benchmark Dow Jones Industrial Average finished the day with a 0.9 percent gain, the tech-heavy Nasdaq lost 1.4 percent.

Quincy Krosby from Prudential Financial said "tech names were overbought, reaching the point where we would expect to see some consolidation."

That trend should continue as focus turns to "sectors that will benefit from a vaccine once it is distributed and take us to the other side of the pandemic," Krosby said.

But London's benchmark FTSE 100 index rose 1.8 percent, after jumping almost 5 percent on Monday, while top Asian indices were mostly higher.

Uncertainty generated by the US election has receded after Joe Biden defeated President Donald Trump, providing a boost to investors looking for less chaos. Trump's avalanche of legal challenges against the result meanwhile have not made waves in markets.

"The clearing of the election fog has permitted underlying market fundamentals to come back into focus and the most recent vaccine news suggests a 'return to normality' should be coming sooner rather than later," said Seema Shah of Principal Global Investors.

Investors continue to bet that Biden will deliver a new stimulus package to boost the US economy, although the chance Republicans will retain control of the Senate means the package may not be as expansive as they would like.