The US stock market closed at a fresh high yesterday. President Trump’s admission that he may be leaving helped. But the catalyst for last week’s rally was, of course, the strong results for the clinical trials using BioNTech’s Covid-19 vaccine.
The winter months are still going to be a challenge: the number of new daily infections for Covid-19 continued to rise this week in the US. President Trump has no intention of ordering a lockdown, let alone encouraging Americans to wear facial masks. Nevertheless, the prospect of a successful vaccine being rolled out across the US and overseas, is very bullish for cyclical stocks.
Whether IT and other technology-related stocks should be marked down is another matter. The BioNTech story is a triumph for technology: mRNA has been possible because of the huge decline in the costs of DNA sequencing. This in turn reflects big increases in computing power. The onset of quantum computing, more powerful supercomputers and ongoing advances in software suggest costs will continue to plummet. The success of the mRNA platform will attract investor funding, allowing BioNTech and others to target a range of other diseases.
Summary
• Cyclicals will lead rally
• But technology has played critical role in new vaccine
• And offers the potential for a quick recovery
