Having recovered strongly from their March 2020 lows global equity markets had begun to falter in September and October as the impact of the global pandemic showed few signs of abating.
Hope and optimism for an eventual return to normality turned to a bout of reality as the enormity of the situation was underscored by increased lockdowns across Europe, providing a further blow to already struggling companies and public balance sheets. Encouraging news in November saw a strong reversal of this trend as not one, but three, successful Covid-19 vaccine trial results were announced. The first came from Pfizer and BioNtec and, with efficacy at 90%, the positive market reaction was immediate. Not only did markets rally, but a strong rotation in those leading the charge from earlier in the year saw value and cyclical stocks outperform at the cost of sectors previously viewed as beneficiaries of the crisis.
Of course, the month was also notable for the US presidential election which proved to be more closely run than many had anticipated. Previous hopes of a Democratic Blue Wave resulting in a generous, equity market friendly, stimulus package gave way to hopes of a more subdued Joe Biden hindered in his perceived left-wing tendencies by a split Congress. Although, at the time of writing, Trump is still to concede, this now seems like the most likely outcome and did nothing to hinder the equity market’s onward trajectory.