Global stocks edge lower despite the UK's approval of Pfizer and BioNTech's COVID-19 vaccine
- Global stocks edged lower Wednesday despite the British government being the first to approve Pfizer and BioNTech's COVID-19 vaccine for use.
- London's FTSE 100 was about flat in early trade, which still outperformed most other regional indexes.
- Approval of a highly effective vaccine could mark the beginning of a new bull market for equities, a global market strategist said.
- In the US, President-elect Joe Biden said he wouldn't immediately remove the elevated tariffs President Donald Trump imposed on China.
Global stocks edged lower Wednesday as investors booked profits from November's record-breaking rally, but the UK's approval of Pfizer and BioNTech's COVID-19 vaccine appeared to cap losses.
The British drug regulator cleared the vaccine for use, making the UK the first Western nation to approve one of the many vaccines in the final stages of testing. The vaccine is expected to be made available in the UK next week.
The US appears close to rolling out vaccines as well, with CNN reporting that it is preparing to ship both the Pfizer-BioNTech vaccine and one made by Moderna in the next few weeks; they would then be distributed quickly pending US regulatory approval.
Despite the positive news, the Euro Stoxx 50 fell 0.2%, Germany's DAX fell 0.3%, and London's FTSE 100 rose by only 0.1%.
Connor Campbell, a financial analyst at SpreadEx, attributed the FTSE 100's relative outperformance to the British pound, which fell 0.4% against the dollar and 0.5% against the euro following reports of tension within the European Union over the number of concessions the EU's Brexit negotiator, Michel Barnier, might give the UK.
But other market watchers were looking beyond some of the shorter-term drivers.
"Approval of a highly effective vaccine may mark the beginning of the end to the COVID-19 economic turmoil and the beginning of a new bull market for equities," said Mike Bell, a global market strategist at JP Morgan Asset Management. "The scientists have come to the rescue and delivered what investors were hoping for Christmas this year."
Bell predicted that as this year's savings were spent next year, the global economy should boom, driving corporate profits and equities higher in 2021.
Some of the biggest gainers in the UK equity market were smaller retail- or travel-related shares, such as the brewery group Marston's, the restaurant operator Loungers, the aircraft-leasing firm Aviation, and the cinema chain Cineworld, which all gained 5% to 8% on the day.
In the US, President-elect Joe Biden said he wouldn't immediately remove the elevated tariffs that President Donald Trump imposed on China, according to The New York Times. He reportedly intends to first review the existing trade deal and consult allies in Asia and Europe to develop a strategy.
Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq fell by 0.1% to 0.3%.
The MSCI All Country World index gained 12.2% in November, its best monthly performance on record, exceeding April 2009's 11.5% rise.
"We see further upside for global equities in this environment, but also expect market leadership to continue to shift," said Mark Haefele, the chief investment officer at UBS Global Wealth Management. "So we recommend investors stay invested for the next leg higher in equities, but to diversify their exposure."
In Asia, Japan reported that visitors wouldn't be required to get vaccinated before arriving for the Summer Olympics next year.
China's Shanghai Composite fell 0.07%, and Hong Kong's Hang Seng fell 0.04%, but Japan's Nikkei rose 0.05%.