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?
As the health crisis ends a key question raised relates to what the shape of the economic recovery will be. There is a belief that the coronavirus crisis will be a "V crisis", which means that after the deep recession it has created, there will be a V-shaped recovery. A deep wound left by the crisis is the large increase in debt.
Sterling has appreciated around 2.75% against the euro, which has stumbled in procuring the right vaccines and is experiencing a powerful contagion wave.
Pfizer/BioNtech SE has announced a substantial 25% boost to the scheduled 200M delivery of vaccine doses to the EU in Q2. The 50M extra doses are welcomed amid renewed focus on blood clot risks with the viral vector vaccines in AstraZeneca and Johnson & Johnson.
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
The New York Times (NYT) relies on anonymous Federal officials while conveying the news that the US Food and Drug Administration (FDA) is preparing to authorize the use of the Pfizer-BioNTech Covid-19 vaccine in adolescents 12 to 15 years old by early next week. "The authorization could come as early as late this week."
As per the latest Reuters Poll of over 100 economists, “The US economy will grow at its fastest annual pace in decades this year and outperform most of its major peers, with the outlook upgraded sharply.” It should, however, be noted that the survey also mentioned the COVID-19 surge as the biggest risk over the next three months.
US President Joe Biden announced that they have reached their goal of 200 million doses of coronavirus vaccines as of Wednesday, as reported by Reuters.
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.