New Delhi: Global stock markets cheered the news of multinational drug maker Pfizer’s announcement that the Covid-19 vaccine developed by the company has a high success rate in the third stage of human trial. While in the US, Dow was up by almost 3%, S&P 500 was up by 1.17%, the only exception among major stock markets was Nasdaq which was down over 1.5% at the time of closing. Reacting to the developments, a top economist told ETV Bharat that now people are happy as they see light at the end of the tunnel in this period of doom and gloom and markets are reacting to that.
During the session, Dow and the S&P 500 touched intraday records in recent times. While Dow touched the intraday high of over 1600 points (5.7%), to reach 29,934 during the Monday, the highest since February 12 this year, the S&P 500 touched a high of 3,646, its highest since September 2 but later both the indices retreated to more moderate levels at the time of close.
“At a time when there is doom and gloom, suddenly there is light at the end of the tunnel. It comes at a time when several European countries are witnessing a second wave, which has undone whatever you have done in the past six months,” said Sunil Sinha, Chief Economist of India Ratings.
Sinha said in such a situation, everyone would welcome this kind of news, including stock markets.
“Everyone is happy and markets are kind of reacting to that,” Sinha told ETV Bharat.
On Monday, Pfizer announced that its Covid vaccine candidate had a 90% effective rate against the Covid infection, the news coupled with other developments, including the news of victory of Democrat Joseph Biden over incumbent President Donald Trump, helped rally the equity markets.
Read: Early data signals COVID-19 vaccine is effective: Pfizer
In the US, all three major market futures also opened higher. While S&P 500 futures and Dow futures opened higher by over one-third percentage points, Nasdaq futures opened more than half a percent higher.
Positive domino effect
Sinha, who has closely tracked the economy and markets, says in such a situation just getting back to normal will help revive the economy.
“If the economy comes back on the track then the corporate results will improve, and it will not require an innovation. It is just getting back to the normal,” he said.
In India, major stock markets BSE and NSE hit their all time highs on Monday.
While the 30 shares index, BSE Sensex jumped by over 704 points (1.68%) to close at its all-time high of 42,597, the broader 50 shares index, NSE Nifty too ended the at a lifetime high of 12,461, up 197.50 points (1.61%).
“The market doesn't work on today's situation, it looks at what will be the results of the companies after 4-6 months. If there is a solution to this pandemic then it is but natural that the situation will normalise after six months and everything will be back on track,” Sunil Sinha added.
“Market is anticipating that and reacting to it,” Sinha noted.
Read: At least 20% students will drop out of education system post-COVID: Save the Children
