Global stock markets rallied Monday in reaction to Joe Biden’s victory in the United States presidential election, declared over the weekend, after which he pledged to try “heal and bring unity” to America after turbulent years under the past administration.
Shares in the Asia Pacific soared early on as the Tokyo-based Nikkei index rose 2.12%, reaching a 29-year high. The Shanghai Composite in China was up by almost 2%, Hong Kong shares rose 1.5% and the ASX200 in Sydney finished up 1.74%.
In the U.S., the Democrat’s electoral win sent indexes soaring and stocks jumped to record levels, also buoyed by significant progress on Pfizer’s Covid-19 vaccine. The Dow Jones Industrial Average climbed 5.3% at the open to reach its first intraday record since February, before Covid-19 lockdowns were imposed, trading just below the 30000 threshold. The S&P 500 index also hit a new peak, jumping by 3.6%.
Biden’s election victory has reassured Wall Street and is responsible for stocks reaching record levels, chief economist & macro strategist at Quintet Private Bank, Daniele Antonucci said. “The markets were already expecting a Biden victory at the end of last week, but confirmation over the weekend is leading to a positive reaction in U.S. markets this morning.”
Antonucci also noted that investors are responding to “diminishing uncertainty and prospects of fiscal stimulus without the threats of tax hikes and extra sector regulation” that is expected to come with a Biden administration.
Pfizer’s announcement that early results from a large-scale trial of its coronavirus vaccine, developed in collaboration with Germany’s BioNTech, suggests the shots may be 90% effective in preventing COVID-19 is also boosting stocks too, Antonucci adds. “Today’s news on vaccine approval should provide further market and economic support.”
Oil prices climbed as hard-hit sectors such as aviation boosted but shares in pandemic beneficiaries fell. Energy companies, miners, industrial companies, and financial services firms all soared in New York on hopes of a successful rollout of vaccines to help tackle the virus outbreak and revive the global economy.
While the wider market surged, the vaccine news had an adverse impact on tech companies that have seen a surge in demand this year due to Covid-19 movement restrictions. These include video conferencing service Zoom and Peloton, which makes internet-enabled exercise bicycles – both shares were down by as much as 20% on concerns a successful vaccine rollout would slow their outstanding sales growth.
A return to normality would mean workers can go back to their desks, meet family and friends in person rather than through internet video calls, and people can use their local gym, rather than take part in online exercise classes.