Historic vaccine boost for value stocks sparks debate on market reset

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The latest shake-up in global equities has left investors wondering whether a switch in favour of an unloved corner of the market has finally arrived. Stocks in Big Tech have been in huge demand since March, dominating indices with startling gains. But the revelation last week that Pfizer and BioNTech had scored a breakthrough in their hunt for an effective coronavirus vaccine sent stocks left behind in the pandemic era soaring.The scale of the rotation to cheap “value” stocks from trendy “momentum” names was the most violent on record, eclipsing even the turmoil of the 2008 financial crisis or the bursting of the dotcom bubble.“The numbers were absolutely astounding,” said Yin Luo, head of quantitative strategy at Wolfe Research. Analysts often use the term “black swan” to describe extreme and unforeseen events that cause financial-market ructions. But this upheaval, he said, was like a “grey rhino” — a large, obvious scenario that is easily ignored until it suddenly charges. The rotation did not end last week. Instead, it picked up pace again this Monday after US biotech group Moderna said its vaccine was 94.5 per cent effective in a late-stage trial. Now with an end to the pandemic crisis in sight, …

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