World markets respond to COVID-19 vaccine news; El Al up by 7%

The Monday report by US drug company Pfizer and German biotech firm BioNTech about early 90% success rate is good tidings for sectors worst hit by coronavirus such as aviation, films and oil.

By HAGAY HACOHEN
Founding Partner at Beta Finance Yaniv Abadi. (photo credit: EYAL FRIDMAN)
Founding Partner at Beta Finance Yaniv Abadi.
(photo credit: EYAL FRIDMAN)
Pfizer and German biotech firm BioNTech’s vaccine news contributed to a euphoria in stock markets around the world on Monday, as sectors badly hit by the coronavirus, among them aviation, films and oil, registered a massive boost, before leveling off on Tuesday.
In Tel Aviv, El Al stock was up, as was Isrotel hotel’s stock. The new assumption that aviation and tourism may soon return was translated into an rise for oil company Bazan Group.
In the US market, Pfizer stocks surged on Monday, but began leveling off by Tuesday, as did those of its competitor Moderna. The price of Texas sweet crude also went up.
But not all movement was upward: Zoom shares went down by 12% and Amazon by 2.4% on Monday.
“There was a time during the COVID-19 crisis that the price of oil per barrel went to an all-time low, even a minus,” founding partner at Beta Finance Yaniv Abadi said. He added that, in addition to the pandemic, Russia, Iran and Saudi Arabia were engaged in a “fuel war,” which also contributed to prices going down.
“When demand goes down because people are stuck at home and don’t use their cars, nobody wants the barrels the large shipping companies are moving from market to market,” he said. “They ran out of place to store them.”
However, Abadi wants to separate sections of the energy market, which he calls “an anchor” for investors due to the state being the actor that pays for the energy services, seeing that energy demand did not drop in all sectors of society. Green energy firms, for example, remained stable and some even grew.
Movie giant AMC reported an increase of 62% of its stock price on Monday – incredible when one considers that it was on the verge of declaring bankruptcy in October, CNBC reported at the time. Azrieli Malls reported an increase of 10% in its stocks, indicating that good things might be in store for both shopping malls and movie theaters located in them.
News that Joe Biden is expected to be next US president led to a mild 2% increase in both Tokyo and Shanghai stock markets as the Democratic nominee is expected to veer away from US President Donald Trump’s “cold trade war” with China.
Sweden was unable to avoid a decline in its economy despite being unique in its COVID-19 policy by keeping businesses open and refraining from lockdowns. In the second quarter of 2020, it reported a decline of 8.6% (in the EU it was 12.1% on average) and experts predict a slow recovery for the Nordic nation.
For the US, where 42% of small companies report they fear they will run out of cash in half a year, the news about a possible COVID-19 vaccination and the hoped-for stability of a Biden presidency are positive – specifically if Biden will be able to pass a large enough and well thought of stimulus package to save American businesses until Pfizer is able to offer US citizens a return to normalcy.
“Investors are happy now because they can show evidence that winter 2021 will not be the same as the winter of 2020,” Abadi said. “We all want the world to return to how it was. Pessimism affects the market, and today the market has spoken.”