What a vaccine roll-out means for the market

Following promising trial results for various COVID-19 vaccines, and approvals already flowing through, how can we expect the market to respond over coming months?




After what has been a tumultuous year unlike any other in modern history, we’re entering the home stretch and finishing 2020 with renewed optimism. At least that is the feeling around the office here at Kauri, where we are looking forward to a promising period ahead.


In recent weeks, vaccine news has been at the forefront of everyone’s minds, with a breakthrough finally coming to fruition. Pfizer, in partnership with BioNTech, was first off the ranks, delivering results that have defied all the odds.


The company has since secured UK approval for its vaccine, with US approval also all but assured. The first recipients of the vaccine have already been inoculated in the UK, demonstrating a remarkable level of progress across the medical and scientific communities. By the time you’re reading this, the first recipients in the US may have already received their vaccinations as well.


If that isn’t enough, we’ve also seen positive vaccine results from the likes of Moderna and AstraZeneca. While slightly behind from a timeline perspective, it is anticipated that these vaccines will also be given the green light in due course. It is a great outcome, buoying confidence that we can slowly move towards a new ‘normal’ and quash the virus.


While a full roll-out will take considerable time, not to mention, introduce a series of logistical constraints, it is our view this should in no way dampen confidence about the upside that now seems within reach.


From here, we anticipate that a broad-based vaccine roll-out will provide the impetus for markets to grind higher throughout 2021.


In effect, the roll-out will be the first factor that can go some way towards mending the structural damage on economies all around the world.


To date, much of the repair job has been facilitated through fiscal support from governments and central banks. While we welcome this, it’s also something that isn’t sustainable over the long-term, which makes it all the more important we’ve reached this crucial junction.


In fact, that’s why a successful vaccine program, delivered by multiple companies, is so critical towards not only controlling the pandemic, but allowing economies to fully re-open. This will bring back the confidence for businesses to invest again. It will also give consumers the confidence to get out again, and ultimately, support business.


Looking ahead to 2021


With this vaccine news proving a catalyst for markets, and the year coming to a close, it’s the right time for us to plan for the coming twelve months.


As we mentioned above, on the back of the vaccine news, we see a strong recovery for global economies in 2021. In our view, developed economies are also likely to lead the rebound, as they will have greater access to various vaccines, and since their economies were far more insulated through central bank support.


We expect that much of the recovery will be driven by activity in areas that have been hamstrung amid lockdowns this year. In that sense, we expect that industries like energy, travel and financials will play catch up as consumer demand and spending, plus movement, picks up across the board.


One of the key drivers in the year ahead will be the reopening of international borders. Although we expect governments to exercise caution in doing so, we believe there will be notable pent-up demand for travel that helps drive economic activity. In this s