Advertisement
Opinion | Vaccine optimism must be tempered with attention to coronavirus resurgence
- While market sentiment has been dominated by hope that encouraging vaccine results will lead to economic recovery, the resurgence of the virus, especially in the US and Europe, means policy support must continue
Reading Time:3 minutes
Why you can trust SCMP
Contrasting developments on the coronavirus and vaccine fronts have been sending mixed signals to markets in recent weeks. The Covid-19 infection situation has deteriorated, with a resurgence in Europe and the US, while trials of vaccine candidates have produced encouraging results.
Advertisement
So far, market sentiment seems to have been dominated by vaccine optimism. Global equities had their largest monthly gain in November since 1988, helped by positive vaccine news on three consecutive Mondays during the month, in addition to US election relief. The strong performance has continued into December with global equities reaching new highs.
Hopes for working vaccines and rapid distribution suggest we might see a faster normalisation of economic activity, especially services. That’s promising for the global economy later in 2021, but the near term is still challenging.
While Britain started its vaccination programme this week, mass vaccination of the general public will take several months, with the effect more visible only towards the second half of the year.
01:55
Coronavirus vaccine: UK grandmother is first person outside trials to get Pfizer Covid-19 shot
Coronavirus vaccine: UK grandmother is first person outside trials to get Pfizer Covid-19 shot
Meanwhile, the virus resurgence continues to weigh on economic activities in the near term. The composite PMI readings for both the euro area and Britain have dipped below the 50 level in November, pointing to a sequential slowdown in economic activity. The decline was mainly concentrated in the service sector, as social distancing measures tightened in the region.
Advertisement
Advertisement