The S&P 500 suffered a late-afternoon sell-off on Thursday after a report that Pfizer had cut in half the number of Covid-19 vaccines it once hoped to ship this year due to supply chain issues.
After rallying to a new record high earlier in the trading session, the benchmark US stock index fell to close lower by just under 0.1 per cent. The tech-heavy Nasdaq fared better, gaining 0.2 per cent for the day.
The Wall Street Journal published a report indicating Pfizer had once hoped to ship 100m doses of vaccine by the end of this year, before cutting the number to 50m because of problems with some raw materials. Pfizer pointed out that the 50m figure was announced last month.
The report was enough to spook investors who have been bullish on a robust rebound in economic growth given the emergence of multiple successful vaccines in recent weeks.
Markets have also recently been cheering the progress made by Congressional leaders towards a potential fiscal stimulus package, helping to send the FTSE All-World index to a new all-time high at one point on Thursday and the dollar lower.
Republican senate majority leader Mitch McConnell said on Thursday that compromise was “within reach”. His comments came a day after some senior Democrats gave their backing to a $908bn stimulus proposal that also has the support of some Republican lawmakers.
The dollar index has fallen by about 6 per cent this year, pushed down by expectations of further borrowing by the US Treasury as well as fund managers having less use for the reserve currency as a haven asset as stock markets have soared.
“The dollar tends to move on risk-on and risk-off, so the performance of stock markets has been disadvantageous for the dollar,” said Natasha Ebtehadj, global equities portfolio manager and asset allocation specialist at Columbia Threadneedle.
The price of US government debt rallied on Thursday, with the yield on the US 10-year Treasury note edging lower to 0.91 per cent. Treasuries have sold off in recent days on concerns that further fiscal stimulus would also feed through to higher inflation. Yields fall as prices rise.
In Europe the Stoxx 600 closed flat, losing momentum after dramatic gains of almost 14 per cent in November.
Sonja Laud, chief investment officer at Legal & General Investment Management, said the global equity rally was “all driven by the expectation of coronavirus vaccines and economic normalisation”, particularly after the UK became the first nation to approve the Pfizer/BioNTech vaccine on Wednesday.
The main question investors faced, she said, was whether “everything has been discounted too quickly”.
“Everything in markets points to a very positive economic story next year and I worry we have gone one step too far,” Ms Laud said.
IHS Markit’s composite purchasing managers’ index for the eurozone, which shows a combined level of activity for the bloc’s manufacturing and service sectors, signalled a contraction in November for the first time in five months.
Sterling rose almost 1 per cent against the dollar to reach close to $1.35 before paring some gains, a level it has not crossed since December last year. Its rise was fuelled by bets that the UK and the EU would reach a Brexit trade deal during last-minute discussions.
The oil price strengthened after Opec and Russia agreed to raise oil supply from January. Brent crude, the international oil benchmark, gained 0.8 per cent to $48.62 a barrel.
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