NEW YORK — Wall Street followed world equity indexes to record levels and crude prices surged on Monday, as promising developments toward a coronavirus vaccine and the prospect of improved trade relations under President-elect Joe Biden gave a jolt to investor risk appetite.
All major U.S. stock indexes touched all-time highs and crude prices jumped more than 10 per cent.
The S&P/TSX Composite Index rose as much as 2.7 per cent in Toronto, most intraday since April 29. The benchmark broke above all its major daily moving averages and reached highest intraday since Sept. 3.
The risk-on rally was fuelled by traders piling into cyclical stocks, led by energy and healthcare sectors. However, the positive momentum was held back by a selloff in technology and mining stocks as Shopify Inc. and gold miners fell. The loonie rose 0.8 per cent to C$1.2948 per U.S. dollar.
Pfizer Inc said its COVID-19 vaccine, developed with German partner BioNTech SE, was more than 90 per cent effective in preventing infection, marking the first successful data from a large-scale clinical trial.
“The vaccine is really driving markets,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “Most of the moves in stocks, bonds and commodities are related to the light at the end of the tunnel for the COVID-19 situation.”
“It’s a game-changer in terms of consumer spending and consumer behavior and it augurs well for future economic activity as we begin to see a reversal of trends caused by the pandemic,” Zaccarelli added.
Global leaders welcomed the U.S. election results, congratulating President-elect Joe Biden even as incumbent Donald Trump refused to concede, vowing to challenge the result.
The CBOE Market Volatility index, a barometer of investor anxiety, dropped to its lowest level since late August.
The Dow Jones Industrial Average rose 1,092.42 points, or 3.86 per cent, to 29,415.82, the S&P 500 gained 99.43 points, or 2.83 per cent, to 3,608.87 and the Nasdaq Composite added 139.21 points, or 1.17 per cent, to 12,034.44.
Pfizer’s announcement gave a jolt to European shares, sending them to an eight-month high, building on hopes of more stable trade policies under president-elect Biden.
The pan-European STOXX 600 index rose 4.03 per cent and MSCI’s gauge of stocks across the globe gained 2.42 per cent.
Emerging market stocks rose 1.65 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.21 per cent higher, while Japan’s Nikkei rose 2.12 per cent.
The vaccine news sent U.S. Treasury yields soaring, with the yield curve at its steepest since March, on optimism the world’s largest economy would emerge from a pandemic-induced recession.
Benchmark 10-year notes last fell 42/32 in price to yield 0.9628 per cent, from 0.82 per cent late on Friday.
The 30-year bond last fell 111/32 in price to yield 1.7521 per cent, from 1.598 per cent late on Friday.
Oil prices jumped nearly 10 per cent as the vaccine news and an OPEC output deal fuelled optimism over rebounding demand.
U.S. crude rose 9.64 per cent to US$40.72 per barrel and Brent was last at US$42.79, up 8.47 per cent on the day.
The prospect of a Biden presidency buoyed trade-related currencies on expectations of a thawing of the tariff war as the dollar index stabilized.
The dollar index rose 0.32 per cent, with the euro down 0.36 per cent to $1.1829.
The Japanese yen weakened 1.91 per cent versus the greenback to 105.36 per dollar, while Sterling was last trading at $1.3133, down 0.17 per cent on the day.
Gold prices slid as investors pivoted away from the safe-haven metal in favour of riskier assets.
Spot gold dropped 4.5 per cent to US$1,863.51 an ounce.
With file from Bloomerg
© Thomson Reuters 2020
Source: Financial Post