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Global markets have been rattled since it has been revealed that a COVID-19 vaccine has been produced by U.S. pharmaceutical company Pfizer and German biotech firm BioNTech, both of which are 90% effective in preventing the virus in those who haven’t been previously exposed to the infection. As these success rates were announced, investors have looked at the impact of this news and strategizing about potential future trading opportunities.
There has been a slight drop in investment in technology companies, differing to the beginning of the pandemic when national lockdowns accelerated the necessary use of technology. Shares of Zoom Video, a booming household name during the year 2020, was particularly noticeable in its fall, as trends are affected by the likelihood of the return to the physical office working environment. Likewise, the most popular streaming service, Netflix, saw a fall in shares, with binging on TV entertainment expected to drop with the release of strict national lockdowns. The e-commerce giants also experienced a decline in their shares, with the likes of Amazon, Alibaba and JD.com having a similarly downward reaction after the vaccine news.
With this mind, analysts predict that the news of a successful vaccine is the catalyst for movement away from stocks related to the stay-at-home lifestyle that benefit from a lockdown, to those that are suited to a world in recovery.
Banks have seen a surge in stocks, which reinforces analysts’ expectations, as they are believed to be a safe option with little to no effect from the coronavirus crisis and the announcement of the development of a vaccine. The aviation sector, hugely stricken by the pandemic previously, has had a bit of a comeback with this news. Shares in United Airlines, American Airlines, Delta and International Airlines Group all rose as a result, with experts expecting a recovery for leisure and business travel companies in general.
Another area that is expected to see a market recovery is that of property and commercial real estate. Understandably, the encouragement to work from home has seen the sector take a huge hit during the pandemic. But the idea of a viable vaccine could see a return to working in offices and city centres, and therefore a predicted boom in the stocks for this industry.
Looking forward into 2021, strategies for investors can be put in place with some certainty, as the ambiguity of the outcome of the U.S elections has come to an end, and the news of the vaccine adding some stability to a developing bullish market. Despite the rise in a stable option with stocks in banks, aviation and retail estate, the removal of these two uncertainties and their effect on the economy can see investors turning from the relatively safe bonds and cash, to some riskier assets.
The advice from trading specialists based on the market reaction to these iconic events of the year 2020, is to continue with a diverse portfolio of investments. One strategy to adopt for investors is to branch into CFD trading. With CFD trading allowing for investments based on the speculation in price movements, it is a wise choice for traders looking to react to the news of a vaccine and strategize on the market reaction too. Although with CFDs, the underlying asset is not directly owned, this type of trading also allows for hedging, to offset against potential losses if the asset is also owned.
Not only is the news of a vaccine itself having an impact on markets worldwide, the percentage of the efficacy of the vaccine produced by Pfizer and BioNTech has also surpassed expectations of the 60-70% rate predicted by analysts, and the usual 40-60% efficacy rate for seasonal flu vaccines. These promising figures have produced optimism for an upward trend in the financial markets and an end in sight for the pandemic.
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