A Shot in the Arm: The Effect of COVID-19 Vaccine News on Financial and Commodity Markets
The Financial Review, Forthcoming
70 Pages Posted: 1 Jun 2021 Last revised: 1 May 2023
Date Written: April 13, 2023
Abstract
We analyze the impact of COVID-19 vaccine announcements by leading vaccine companies on the financial and commodity markets from January to December 2020. We show that the vaccine announcements had varied and economically significant impacts on asset prices. The announcements moved interest rates, stock markets in the U.S. and numerous other countries as well as commodities used in transportation and some agricultural commodities. We show that the stock and commodity markets that experienced larger declines at the beginning of the pandemic receive a larger boost from good vaccine news. We also find that the vaccine news affects stock returns through changes in the expectations of the corporate cash flows and the expected equity risk premium.
Keywords: COVID-19 vaccine, stock market, interest rates, commodities, foreign exchange
JEL Classification: F31, G12, G14, G15, I10, Q41
Suggested Citation: Suggested Citation