Markets explode with euphoria but are they right?
Stock market historians may quibble but I certainly can’t remember a time when blue chip shares soared in the way some of them did today.
The owner of British Airways, International Airlines Group (IAG) rose 40%, airline engine maker Rolls Royce up 33% while cinema owner Cineworld saw its shares rise 50%.
Extraordinary, until perhaps you remember that these companies are the ones whose value has been most destroyed by the coronavirus. IAG for example is still worth more than 40% less than this time last year.
There have been losers today as well. Some of those who have thrived in the time of coronavirus gave back some of their gains.
Home food delivery experts Ocado and Just Eat were both down around 10% and the office workers new best friend Zoom was down 14% as the US stock market opened.
Note – it is still worth six times more than it was last year – some habits are likely to stick.
There are also significant challenges in distributing a vaccine which needs to be kept at -80C with stiff competition for the 50 million doses expected to be produced by the end of the year.
But markets are primarily about sentiment – does tomorrow look better than today – and in that regard there has been a radical and probably permanent sea change.
With more vaccines in development that optimism could grow.
What this result demonstrates is that while the virus is not yet beaten it is beatable.
That ray of light has lit up stock markets around the world.
As always, some people in the markets are already looking for something else to worry about.
If we are returning to a semblance of normality in the months ahead, do the US authorities really need a stimulus package as big as the $3tn to $4tn being discussed by the Biden team?
In fact, does the gargantuan amount of stimulus already announced begin to push up inflation if economies begin to recover quickly.
Those are concerns for another day. For now, the markets, like the rest of us, are enjoying the warm glow of the first significant sentiment boost since the virus started ravaging the world economy.