- Global stocks rose Tuesday, extending the rally built on Pfizer's vaccine news and the US election, but investor caution on the depth of the pandemic and political uncertainty capped gains.
- Pfizer on Monday said its phase 3 vaccine trial showed a high degree of efficacy, giving investors hope that some kind of normality could be regained.
- UBS' chief investment officer, Mark Haefele, said investors needed to pivot away from big tech and the primary stay-at-home beneficiaries.
- Senate Majority Leader Mitch McConnell declined to acknowledge President-elect Joe Biden's election victory on Monday, adding more disorder to President Donald Trump's call to weigh up legal options.
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The rally in global equities extended Tuesday, a day after Pfizer said its late-stage trial of its COVID-19 vaccine had shown promising results, but caution over the depth of the coronavirus pandemic and an uncertain US political climate limited gains.
Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq rose 0.5%, indicating that blue-chip shares might prolong Monday's rally that lifted the benchmark indexes toward record highs.
There is still a long way to go until a vaccine might be widely rolled out. But Pfizer's announcement "gives investors some hope that a vaccine could arrive sooner than anticipated, and pave the way to some kind of normality," Milan Cutkovic, a market analyst at Axi, said.
Mark Haefele, the chief investment officer at UBS Global Wealth Management, said the market's reaction highlighted the need for investors to diversify for the next leg toward more cyclical parts of the market that had lagged in 2020 and away from big tech and the primary stay-at-home beneficiaries. He said the next leg up in stocks would be driven by an end to US political uncertainty and the sustainable increase in global mobility that a vaccine could bring.
After positive vaccine news, the S&P 500 climbed about 4% in early New York trading, reaching a record high. But after Senate Majority Leader Mitch McConnell declined to acknowledge President-elect Joe Biden's victory in last week's election, the index surrendered a lot of those gains, finishing only 1.2% higher.
McConnell said President Donald Trump was "100% within his rights" to investigate any voting irregularities and weigh his legal options.
Read more: Morgan Stanley's top cross-asset strategist pinpoints 3 areas of the market set to directly benefit from a successful COVID-19 vaccine - and explains why investors may be 'surprised' by the level of normalcy we can achieve
US Attorney General Bill Barr has authorized federal prosecutors to begin investigations into voter fraud and irregularities, in a major break from American political norms. Investors may not be taking this too seriously, however, Connor Campbell, a financial analyst at SpreadEx, said.
In the US, the biggest winner was the energy sector, rising about 14% because of surging oil prices, Deutsche Bank analysts said. Tech stocks lagged after Zoom fell 20% along with other stay-at-home stocks including Netflix and Clorox. Cruise and airline stocks saw optimism return.
A large part of the region is still in partial or full lockdown, and Cutkovic said that for the sake of consumer and business confidence it was crucial to avoid a back-and-forth between different restriction levels.
Gold rose 1.4% to about $1,897.85 an ounce, recouping some of Monday's 5% drop.