Promising vaccine results raise hope of economic recovery

New promising COVID-19 vaccine test results rally the financial markets and raise hope of economic recovery and a return to life as it was before COVID-19 stroke. Vaccine development will impact the economy in 2021 much more than the US presidential election outcome, says senior analyst at Danske Bank, Mikael Milhøj.

Promising, new test results for a COVID-19 vaccine developed by Pfizer and BioNTech let to soaring stock markets yesterday in the expectation of economic recovery and an end in sight for currents curbs and restrictions on consumer behaviour and everyday activity.

Photo: David Dee Delgado/AFP/Ritzau Scanpix

”According to the current results, the vaccine candidate can prevent infections in ninety percent of cases compared to an expected sixty percent and an standard efficiency of between forty and sixty percent for normall flu vaccines. No significant side effects have been reported, and Pfizer says, tit has a capacity to produce 50 million vaccines before year end and about 1.3 billion in 2021”, says senior analyst at Danske Bank, Mikael Milhøj. 

Rally in expection of things to come
He adds that the vaccine must be administered twice to be effective, and that approval is still pending. 

”It can take months before we have a full understanding of the efficiency and safety of the vaccine, both of which are key parameters for health authorities approving a vaccine. But markets chose to rally in the expectation of things to come, particularly so in Europe, where many business are sensitive to COVID-19. Reactions in the US were more mixed due to the higher proportion of IT and technology companies”, says Mikael Milhøj. 


The news of promising test results now make Investors anticipate that a vaccine can stop the spread of the pandemic in 2021 and ease current restrictions, which will pave the way for a normalisation of economic conditions

Mikael Milhøj

Senior Analyst, Danske Bank


Reduces risk of a prolonged crisis

The stock market rallies make sense as vaccine developements may impact the economy next year a lot more that the outcome of the US election, he says. 

”With efficent and safe vaccines that can be prodcuced and distributed in sufficent quantities, the prospect of normalisation in 2021 has suddenly increased significantly. Many countries, particularly in Europe, are currently experiencing increasing infection numbers, more hospital admissions and higher mortality, which has let governments to enforce new restrictions and stricter lockdown measures”. 

”It is hard to see that we can ease current restrictions and curbs on our behaviour until one or more vaccines can halt the pandemic. The news of promising test results now make Investors anticipate that a vaccine can stop the spread of the pandemic in 2021 and ease current restrictions, which will pave the way for a normalisation of economic conditions and improved earnings potential for business”, says Mikael Milhøj, adding that this will also reduce the risk of the current economic crisis to evolved into a prolonged, global downturn.