A gauge of global shares climbed to a record for a third straight day and the dollar continued to slump on Wednesday as further upbeat Covid-19 vaccine news helped alleviate concerns about rising infection rates and related economic damage.
On Wall Street, Pfizer Inc shares gained 0.78 per cent after the drugmaker said its Covid-19 vaccine was 95 per cent effective and the company would apply for emergency US authorisation within days.
Pfizer’s announcement came on the heels of a similar report from Moderna Inc on the effectiveness of its vaccine.
Still, with many major equity indexes at or near record levels, analysts caution additional stimulus measures are needed to buttress the economy until a vaccine can be widely distributed, and gains evaporated late in the session.
“It’s a confused market because portfolio managers don’t know which time period to focus on,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“It’s this trade-off between the near term over the six to nine months of continued spread of the virus and the period after that when everyone’s vaccinated and the virus is eradicated.”
Underscoring the growing pandemic, New York City Mayor Bill de Blasio announced the city’s school district, the largest in the country, will halt in-person learning on Thursday.
Richmond Federal Reserve President Thomas Barkin said allowing the Federal Reserve’s emergency lending programmes to sunset on Dec. 31 could pose risks to financial markets, especially as the pandemic is escalating.
The Dow Jones Industrial Average fell 344.93 points, or 1.16 per cent, to 29,438.42, the S&P 500 lost 41.74 points, or 1.16 per cent, to 3,567.79 and the Nasdaq Composite dropped 97.74 points, or 0.82 per cent, to 11,801.60.
After a sluggish start, European shares closed higher as vaccine optimism and a round of takeover deals helped offset concerns over fresh lockdown measures to slow the spread of the virus in the region.
The pan-European STOXX 600 index rose 0.44 per cent and MSCI’s gauge of stocks across the globe shed 0.52 per cent, touching an intra-day record for a third consecutive day before turning lower late in the session as the US equity market suffered a swoon heading into the close.
Dollar on slippery ground
While the US dollar moved off its earlier lows following better-than-expected US housing data, the greenback was still on pace for its fifth straight decline as the Pfizer news gave investors an appetite for some risk taking.
The dollar index fell 0.043 per cent, with the euro down 0.05 per cent to $1.1855.
The weaker dollar also helped lift the pound, along with hopes Britain will be able to secure a post-Brexit trade deal with the European Union before its departure from the EU’s customs union and single market in January. Sterling was last trading at $1.327, up 0.22 per cent on the day.
US Treasury yields reversed early declines on optimism over a potential vaccine and after a weak 20-year bond auction diminished the appeal of the safe-haven debt. Benchmark 10-year notes last fell 1/32 in price to yield 0.875 per cent, from 0.872 per cent late on Tuesday.
The increased risk appetite on the vaccine news also helped oil prices advance, along with hopes OPEC and its allies will delay a planned increase in oil output.
US crude settled up 0.94 per cent at $41.82 per barrel and Brent was at $44.34, up 1.35 per cent on the day.
Safe haven gold, meanwhile, dropped 0.5 per cent to $1,870.19 an ounce.