Vaccine hopes: time for sunny optimism?
THERE has been much for investors to celebrate in the past fortnight as markets rebounded strongly, following the news of the imminent release of an effective coronavirus vaccine.
Leading the charge, Pfizer and its German partner BioNtech announced that its vaccine candidate was showing a degree of efficacy that even the sunniest optimists thought improbable.
Almost immediately, a sharp upgrade to the 2021 outlook for the world economy drove yields, stocks and commodities higher at the same time as many investors were still digesting the likely implications of the US election result.
The jubilant reaction from the world's scientists, politicians and investors owes something to the idea that this news provides not just blind hope, but scientific proof, that the Covid-19 virus could be beaten. It was, literally, the news we were all waiting for after eight relentless months of hard-going headlines.
Centuries of scientific development have led us to a point where it appears we are now able to identify, minutely analyse and move to overcome a new disease within a matter of months.
For context, in 1918, in the face of the Spanish flu, the best parts of a physician's armory amounted to quinine, dry champagne (yes, seriously) and phenolphthalein (a cancer-causing laxative), along with another attempt at the use of blood-letting, which although previously unsuccessful against the 1916 flu, they tried again. It is jokingly said that the patients who survived the Spanish flu did so in spite of their doctors.
It is astounding to think that, being just a century ago, in 1918, antibiotics had not been invented and viruses had not yet even been identified. The scientific leaps to develop a novel device (the electron microscope) to eventually see the influenza virus didn't come around until 1940.
By contrast in 2020, within just two weeks of the first outbreak, scientists had identified the infection, specified its cause as a coronavirus, sequenced its genome and discovered that its most likely animal hosts were bats. This allowed the global scientific community to begin the complicated process of understanding the vaccine and aiming for a cure to beat it.
But we are not out of the woods yet, and the truth now that coronavirus is beatable will not be of help to us this side of Christmas. Immediate jubilation aside, the practicalities of vaccinating the world will undoubtedly be a challenge and with hope must also come a healthy dose of caution.
Meanwhile though, investors are enjoying the results of an economic bounce-back, with many of the recently unloved value sector stocks rising far above the dark lows of 2020 and some very significant movements in travel and hospitality-related sectors.
As always with these things, where there are winners, there are also losers and we saw some of the biggest beneficiaries of the coronavirus zeitgeist take a bit of a tumble (Zoom and Peleton being two such examples).
As governments rush to pre-order supplies of successful emerging vaccines, and positive trial announcements are expected from other front runners, we would expect to see further stabilising of a global recovery outlook. Optimists and those with faith in science and innovation are likely to be looking towards a path back to normality.
Beware of detailed predictions in how the new normal will look – as always, future world direction is very difficult to forecast.
This week's outlook appears bright with sunny spells, but it's probably best to bring your coat for now: remember the certainty that we must endure winter before we can look forward to spring.
:: Claire McCombe is a wealth manager at Barclays Wealth & Investment Management, Belfast.