Some 100 years have passed since the Spanish Influenza pandemic, and around 300 since composer Antonio Vivaldi wrote “The Four Seasons.” After a turbulent 2020, the impact of coronavirus in 2021 can be divided into four different periods with distinct reactions in markets.
Covid fears battle vaccine hopes, how is it moving markets?
Despite the serious problems with the availability of COVID-19 vaccines, the vast majority of people in the United States and Europe will have been vaccinated by the summer, so the public health situation will be largely the same in these parts of the world. However, despite the homogenization of these areas, it remains uncertain how long it will take people and businesses to return to pre-pandemic conditions.
We are looking at a positive opening to European markets, which are following the US higher, but this could change as the slow vaccination programme across the EU could be further delayed as Covid cases start to spike again.
The strong pace of vaccinations in the US and UK is supporting their economies and currencies putting further pressure on Europe, as we maintain a strong risk backdrop.
How covid-19 impacts markets
The first case of Coronavirus (COVID-19) appeared in December 2019 in Wuhan, China. Since early 2020, this disease has spread rapidly, generating medical crises, overwhelming hospitals and prompting governments to enact lockdowns around the world.
During the first months, investors responded with a sharp panic-selling response to the possible economic collapse, typical to such black-swan events.
The pandemic had a wide-ranging and severe impact on financial markets, including stocks, bonds, and commodities. Governments and central banks moved to shore up the economies.
It also had a substantial influence on businesses around the world. The uncertainty related to lockdown durations and economic recovery left many businesses closed and hit households hard.
From November 2020, several companies came out with vaccines and reported impressive efficacy rates . The immunization process is has advanced rapidly in Israel, the UK and the US, but lags elsewhere. Economic figures show that the vaccine and stimulus-led economic recovery is on track, but uncertainties remain considerable.
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Coronavirus in United States
Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases (NIAID), told Reuters on Thursday that the United States may not need AstraZeneca's COVID-19 vaccine, even if it wins U.S. regulatory approval. “The vaccine, once hailed as another milestone in the fight against the COVID-19 pandemic, has been dogged by questions since late last year, even as it has been authorized for use by dozens of countries, not including the US,” said the news.
US President Joe Biden said on Monday that they could still see a setback in the US vaccination program and added some of the reckless behavior seen on tv in recent weeks point to more COVID cases ahead, per Reuters.
Following his meeting with US President Joe Biden, Senate Democratic Leader Chuck Schumer said on Wednesday that Democrats are united on a "big and bold" coronavirus relief package.
Coronavirus in Europe
Despite the serious problems with the availability of COVID-19 vaccines, the vast majority of people in the United States and Europe will have been vaccinated by the summer, so the public health situation will be largely the same in these parts of the world. However, despite the homogenization of these areas, it remains uncertain how long it will take people and businesses to return to pre-pandemic conditions. Travel recovery, for example, will be slow. The European Union is likely to introduce quarantine-free cross-border crossings for those with vaccine passports, but restrictions on long-distance travel will remain in place for a long time to come.
Border controls between the vaccinated rich world and the unvaccinated poor world are likely to become stricter, especially if new mutations of the virus continue to appear.