US and European equities soared overnight amid a most frothy global risk rally but gold was down nearly 5% on the back of far better than expected results by the vaccine candidate developed by Pfizer and BioNTech.

Those results showed a more than 90% effectiveness rate among 94 subjects infected with COVID-19 and who had at least one symptom. Pfizer indicated it remains on target to seek sale permission from regulators by the end of this month. Depending on how long regulators take to review it, the distribution could then start within months.

And while risk assets have pared a good chunk of their initial knee jerk reaction to this remarkable healthcare breakthrough, it is hard to argue that the vaccine success camels the nick of time for travel and oil complex.

The investment world is now debating whether the rally is sustainable or if it will fade considering it will take six months for many of us to receive the vaccine, assuming a willingness to take it, which to me is a sign that some folk haven’t done much and are trying to figure out the next leg.

I would expect a bit more dispersion on both sides of the trade going forward. The Tech trade where there are incredibly high valuations dependant on the lower for longer interest rates may pull back further.

The vaccine distribution may eventually alter the course of the central bank and government’s fiscal policies. Simultaneously, the powerful short squeeze in some of the COVID-19-sensitive names will dry up, and most likely, the real money will flow into the higher-quality words on that side of the trade.

While the bull market just received “a by George, we’ve done it” shot in the arm as the vaccine will genuinely be a game-changing panacea for global healthcare concerns.

But those heartening developments on the vaccine front are giving way to worries that lawmakers will pass a smaller stimulus package, and the next move for central bankers will not be lower.

It is just not the vaccine that will hold back US infrastructure spending. There is also some cynical objection from bi-partisan politicians who are not keen to do anything to boost a political rival.

After this highly contested election and assuming Georgia stays Red, the Democrats will struggle to get any frothy legislation through the hawkish Red Senate.

There is a lot for investors to take in right now, not to mention the Joe Biden electoral victory has ushered in a perceived transformation in geopolitical risk as investors debate how the world might be a more peaceful place during the next four years.

After such a monumental eureka moment for risk markets, look for the market to hash out a base before eventually griding higher.

Oil gets a double boost

For oil market concerns, two “puts” are better than one after oil rallied on the vaccine news by over 9% after an initial leg-up when Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, at the ADIPEC conference, said OPEC+ cuts were to be extended to 2022.

At a minimum, oil has not one but two price planks that should hold the floor upon oil prices while investors wait for the vaccine to get rolled out.

Unquestionably the vaccine will be a game-changer for the oil complex.

However, still the pandemic matter most for near term concerns. As with the case for all commodities, oil is priced on the spot markets, so markets are still exposed to the virus where the primary struggle is to breach the current supply level before prices can even think about starting to rise in any meaningful way.

As lockdowns in Europe accelerate and localised outbreaks in the US widen, suggesting that the oil markets top side ambitions will be held in check near-term as it will likely take six months for many of us to receive the vaccine.

Equity and Oil market analysis and insights from Stephen Innes, Chief Global Market Strategist at Axi