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%. Pfizer Inc said its COVID-19 vaccine, developed with German partner BioNTech SE, was more than 90% 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%, to 29,415.82, the S&P 500 gained 99.43 points, or 2.83%, to 3,608.87 and the Nasdaq Composite added 139.21 points, or 1.17%, 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% and MSCI's gauge of stocks across the globe gained 2.42%.
Emerging market stocks rose 1.65%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.21% higher, while Japan's Nikkei rose 2.12%. 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%, from 0.82% late on Friday. The 30-year bond last fell 111/32 in price to yield 1.7521%, from 1.598% late on Friday. Oil prices jumped nearly 10% as the vaccine news and an OPEC output deal fueled optimism over rebounding demand.
U.S. crude rose 9.64% to $40.72 per barrel and Brent was last at $42.79, up 8.47% 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%, with the euro down 0.36% to $1.1829. The Japanese yen weakened 1.91% versus the greenback to 105.36 per dollar, while Sterling was last trading at $1.3133, down 0.17% on the day. Gold prices slid as investors pivoted away from the safe-haven metal in favor of riskier assets. Spot gold dropped 4.5% to $1,863.51 an ounce.