Editorial & Advertiser disclosure

Global Banking & Finance Review® is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Home > Investing > The equities market reacts to the prospect of possible vaccines

The equities market reacts to the prospect of possible vaccines

Published by linker 5

Posted on November 18, 2020

4 min read

Last updated: January 21, 2026

Stock market graph illustrating equities rise in response to vaccine news - Global Banking & Finance Review — This image depicts a stock market graph showcasing the rise in equities as investors respond to positive vaccine news from Pfizer and Moderna, highlighting a potential recovery in the financial markets.

By Rupert Thompson, Chief Investment Officer at Kingswood

The rally in equities continued last week with global equities gaining 2.5% and breaking through their all-time highs earlier in the year. Equities are up a further 1.5-2.0% today.

The reason for the rally is simple – the recent vaccine news. Last week, Pfizer announced its vaccine is 90% effective in preventing Covid infections and Moderna reported today that its product is 94.5% effective. These levels of efficacy are considerably higher than had been expected.

It now seems very likely that vaccines will start to be rolled out early next year, if not before. Logistical challenges of a mass roll-out will be significant, not least with the Pfizer vaccine requiring ultra-cold storage and both vaccines requiring two doses. Mass inoculation therefore looks unlikely before next summer. There is also the additional complication that while 80% of the population is supposedly willing to be inoculated in the UK, it is no more than 60% or so in the US.

Even so, the vaccine news is very significant and means there is now clear light at the end of the Covid tunnel. Near term of course, the picture is not half so reassuring. Infections have fallen back somewhat in Europe just recently but have picked up again in the UK and are still heading higher rapidly in the US. The UK and European economies now face a double-dip recession in the fourth quarter as a result of the lockdowns and the recovery could also falter in the US as renewed social distancing measures are imposed.

But markets are forward looking. The prospect is now for a strong recovery next year, buoyed by pent-up demand as consumers cheer up and spend some of the savings built up earlier this year. If the sunlit uplands are visible on the horizon, investors are usually prepared to look through any short-term troubles. This was the case in March when the massive policy stimulus fuelled the sharp rally even while we were still in a deep recession. The same is true now.

While equities near term may have little scope for further gains following their bounce, they do have further upside next year. Indeed, return prospects look significantly higher for stocks than bonds, where returns are likely to be very limited.

The vaccine news not only triggered a rally in equities generally but also a rotation out of the areas which have excelled this year (such as tech stocks) into the distinct underperformers. Financials bounced strongly last week as did to a lesser extent industrials. This move into the cheaper and more cyclical areas of the markets very likely has further to run over coming months given the extent of their underperformance of late and expectations for a strong economic recovery next year.

The UK was also a notable outperformer last week, gaining 7% and reversing part of the marked underperformance seen so far this year. This occurred even as the latest GDP data confirmed that the UK economy has been hit considerably harder by the pandemic than most others. Whereas GDP in most other Western economies was 4-5% lower in Q3 than at the end of last year, UK GDP was down close to 10%. Only Spain fared as badly.

Last week’s bounce in UK equities also coincided with the comings and goings at 10 Downing St. But rather than representing a sigh of relief at the prospect of more harmony at the top and possibly a more conciliatory approach to Brexit, it much more likely just reflects the general move into the most beaten-up markets. At their current very cheap valuations, UK equities do not need much to go right in order to see a period of outperformance.