FDA vaccine approval boosts US stock markets

In our weekly Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

Stock markets in the US saw a boost last week as the Food & Drug Administration granted its full approval of the Pfizer-BioNTech COVID-19 vaccine.

Furthering prospects of an economic recovery, the news of the FDA’s approval of the Pfizer-BioNTech vaccine - which could convince more employers to mandate use of the vaccine - boosted stocks early in the week.

The tech-heavy Nasdaq Composite index outperformed the broad market S&P 500 Index and the large-cap Dow Jones Industrial Average. The Russell 2000 Index of small-cap stocks posted particularly impressive gains. Stocks in the energy sector jumped higher as crude oil prices gained about 10% for the week.

The eurozone economy appeared to remain in expansion mode in August, with the early headline number for IHS Markit’s composite Purchasing Managers’ Index (PMI) coming in at 59.5, a strong reading that was only slightly down from the 15-year high of 60.2 registered in July. The pace of growth in both the manufacturing and services sectors also dropped subtly from the preceding month but remained robust relative to historical levels. Inflation in input costs and selling prices remained elevated, likely reflecting the combination of supply chain constraints and the rebound in demand.

The Japanese government extended its COVID-19 state of emergency to eight more prefectures, with the measures set to last until September 18. Prime Minister Yoshihide Suga said that infections are spreading on an unprecedented scale in most regions across the country and acknowledged that the medical system is in a severe situation. However, Japan has been speeding up its belated vaccination drive in recent months, and Suga highlighted that about 60% of the country’s population will have been fully vaccinated by the end of September. Despite this, the country’s stock markets still gained by more than 2% over the week.