With news of vaccines on the horizon, how have markets reacted?
The biotech group Moderna announced its vaccine to be 94.5% effective this week, following on from similar announcements from Pfizer and BioNTech last week.
Both the S&P 500 and Russell 2000 closed at record highs. The Russell 2000 measures small-cap stocks and is seen as a barometer of the domestic economy, with its rise indicating positive sentiment.
Interestingly the stocks that increased the most were in companies that would stand to benefit from normality, such as cruise lines, airlines and travel companies. Whereas companies that are perceived as pandemic beneficiaries seem to be seeing a decline in their growth. This includes pharmaceutical companies that have seen consistent rises in their stock price over the last few months.
Understandably, technology stock price growth continues to slow as their prices have reached previously unimaginable levels and it seems there may not be much more room for short term growth.
Meanwhile on Sunday/Monday, 15 countries in Asia-Pacific signed the largest free trade deal in history. The agreement comes after 8 years of talks between China, Australia, New Zealand, Japan, South Korea the 10 ASEAN member states. Known as the R.C.E.P (Regional Comprehensive Economic Partnership), the agreement is limited in scope yet significant. It covers 2.2 billion people, more than any before. The agreement solidifies many rules that were previously unofficially in place, yet doesn’t bring much new to the table. Many observers consider the agreement more of a power play from China than anything, who are keen to establish themselves as the dominant force in the region.
Volatility is far from over. With a new president soon on his way in the US, Brexit yet to happen and many ongoing regional conflicts either on the simmer or boiling over, investors are by no means out of the woods. However, our message of staying invested and thinking long-term remains the same. Anyone who panicked and sold out of their investments back in March and April would have missed out on substantial growth.
If you have any concerns regarding your portfolio and would like to speak to one of our team in more detail, please get in touch for a free and impartial review.