Where will vaccines take the markets?
We have a deal on Brexit and a new US President. Both huge changes. And vaccines promise salvation but how will it play out? In his new year update, our Chief Economist Steven Bell takes a look at the prospects for the global economy and the implications for corporate earnings; all with a view to judging where financial markets are headed.
There is a lot of good news: as people get vaccinated, the number of hospitalisations will start to fall. Remember that the various vaccines have high efficacy rates for stopping you getting Covid symptoms, and against all the odds, it does seem that the UK government can meet its target of 2 million doses a week.
But don’t get carried away: let’s not forget that the pressures are set to hit breaking point. And of course, the vaccine trials had very few elderly recruits and none looked at a single dose strategy, which adds to the uncertainty. And once we start relaxing restrictions, the fall in new cases, hospitalisations and fatalities will flatten.