Last week, biotech giant Moderna announced that its coronavirus vaccine is 94.5% effective. This follows on from Pfizer’s vaccine announcement the week before of 90% efficacy (later revised up higher to 95%). Both companies are on-track to seek permission for emergency use in the US within weeks – a development that Dr Scott Gottlieb (a medical expert and Pfizer board member) thinks could herald the end of the COVID-19 pandemic as early as next year.
We also had an announcement from a vaccine project in the UK, run by Oxford University and AstraZeneca, which showed a strong immune response from their vaccine in older and more vulnerable patients, with more detailed results due out in the coming weeks.
European countries dealing with the ‘second-wave’ of COVID have seen new cases stabilising in Germany, Spain and Italy, while cases are declining in Belgium, France and the Netherlands.
These positive developments pushed markets higher last week and sent volatility down. The VIX Volatility Index receded to 23, which is approaching the critical long-term average value of 20 – what you would expect from normal markets.
With good news on the pandemic and a new US president due for inauguration in early 2021, financial markets are correct in our view to be pricing in a more optimistic outlook.
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