LONDON (Reuters Breakingviews) - It turns out preventing Covid-19 is a bigger deal for markets and the global economy than the drawn-out election of a new U.S. president. News that a vaccine in the works from Pfizer and BioNTech may be over 90% effective gave stocks and government bond yields an injection of adrenalin on Monday. The prospect of a return to normality is a potent market stimulant.
European stocks popped higher, and E-Mini S&P 500 Futures traded up nearly 4%. Shares of oil groups like Royal Dutch Shell and BP, heavily dependent on a rebound in economic activity, surged over 10%. AMC Entertainment, the U.S.-listed global cinema operator under huge pressure from pandemic-related closures, saw its stock jump more than 70% at one stage in pre-market trading.
The optimism is understandable. It’s hard to overstate how good the vaccine looks based on Pfizer and BioNTech’s statement. That level of effectiveness is sufficiently high to snuff out the pandemic via herd immunity. It is also high enough to hint that having only one of two planned doses may offer decent protection, which might allow more people to be inoculated sooner.
Manufacturing capacity presents the biggest challenge. Pfizer reckons it can make perhaps 50 million doses this year and up to 1.3 billion next year, only enough for about a sixth of the world’s population. There’s likely to be a tussle over which countries and demographic groups will get first dibs. Although capacity will ramp up quickly for any successful remedy, the pandemic won’t simply evaporate as soon as regulators give a vaccine the nod.
Meanwhile, Pfizer has yet to release all its clinical data, and vaccines can be tricky things. The company says no serious safety concerns have emerged, but it’s still collecting information. Pfizer’s drug also needs to be stored at ultra-low temperatures that most doctors’ offices can’t provide.
Dozens of rival vaccines are in the works and many rely on more conventional medical technology and distribution methods. Pfizer’s success probably means others have a shot at working as well. Once readily available, though, enough people need to get inoculated. Fewer than two-thirds of Americans say they would, for example, according to a recent Ipsos poll. Increasing that number is just one challenge for U.S. President-elect Joe Biden. Investors may find it pays not to get carried away by good scientific news.
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