It may take a while for an effective coronavirus vaccine to roll out around the world, but futuristic global stock markets are already celebrating the way it is here.
The total value of stock markets around the world hit an all-time high of $ 95 trillion as of Wednesday and bounced back from its March low in the depths of the coronavirus pandemic, according to Torsten Slok, chief economist at Apollo Global Management.
The recent surge in stocks to new highs was triggered by news that Pfizer and BioNTech's coronavirus vaccine was over 90% effective, much better than expected by health experts and the markets.
"Although the near-term outlook will be negatively impacted by the second wave of the virus, global equity markets are being driven higher by vaccine hopes, central bank easing and the prospect of additional global fiscal easing," Slok told CNBC.
U.S. stocks spearheaded the comeback this year as the S&P 500 wiped off its coronavirus losses in mid-August. The benchmark hit another intraday record high of 3,645.99 on Monday as the promising vaccine news sparked a massive rally in cyclical names.
However, the biggest driving force behind the seven-month recovery has been the unprecedented easing measures by global central banks, as well as the fiscal incentives by governments aimed at bailing their respective markets and economies through the coronavirus crisis.
Central banks around the world have cut interest rates to historic lows. The Federal Reserve launched a number of programs, including a perpetual commitment to continue buying assets as part of its quantitative easing measures. Central bank "money pressures" have swept investors from low-yielding bonds into stocks.
In the United States, lawmakers passed a historic $ 2 trillion coronavirus relief treaty in March that gave Americans improved unemployment benefits, stimulus checks, and other relief efforts. Washington is expected to sign another, albeit smaller, stimulus agreement in the coming months.
After the big vaccine news from Pfizer, many big Wall Street companies raised their prospects for the stock market and looked for a faster and smoother economic recovery.
JPMorgan now expects the S&P 500 to climb about 10% to 4,000 by early next year, with "good potential" to climb even further to 4,500 by the end of next year – a rally of 24% from out here. Goldman Sachs expects the S&P 500 to grow north of 20% through late 2021.
Of course, the market could evolve as parts of the economy are nowhere near the pandemic. For example, weekly jobless claims in the US are still above the pre-coronavirus record of 695,000 in 1982, despite a decline for four consecutive weeks of 709,000.
At the same time, rising cases of new coronaviruses suggest a harsh winter before the final arrival of a vaccine, which could take months before mass distribution.
Daily new cases of the coronavirus in the USA rose to over 144,000 on Wednesday. This is the highest daily count to date and brings the national seven-day average to 127,603 – 35% more than a week ago.
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